Flood Insurance Market Parity and Modernization Act

Summary: Flood Insurance Market Parity and Modernization Act This bill amends the Flood Disaster Protection Act of 1973 to revise requirements for federal and private flood insurance. This bill revises the financial requirements that apply to flood insurance for home loans or loan guarantees by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Private flood insurance must meet any financial strength requirements set forth by Fannie Mae and Freddie Mac.  Private flood insurance may include nonadmitted insurers (including surplus lines insurance) as long as the insurer is eligible to provide insurance in the home state of the insured and complies with the laws and regulations of that state. The National Flood Insurance Act of 1968 is amended to direct the Federal Emergency Management Agency (FEMA) to consider any period during which a property was continuously covered by private flood insurance to be a period of continuous insurance coverage, including for the purposes of National Flood Insurance Program subsidies.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Flood Insurance Market Parity and 
Modernization Act''.

SEC. 2. PRIVATE FLOOD INSURANCE.

    (a) Mandatory Purchase Requirement.--
            (1) Amount and term of coverage.--Section 102 of the Flood 
        Disaster Protection Act of 1973 (42 U.S.C. 4012a) is amended by 
        striking ``Sec. 102. (a)'' and all that follows through the end 
        of subsection (a) and inserting the following:
    ``Sec. 102. (a) Amount and Term of Coverage.--After the expiration 
of sixty days following the date of enactment of this Act, no Federal 
officer or agency shall approve any financial assistance for 
acquisition or construction purposes for use in any area that has been 
identified by the Administrator as an area having special flood hazards 
and in which the sale of flood insurance has been made available under 
the National Flood Insurance Act of 1968 (42 U.S.C. 4001 et seq.), 
unless the building or mobile home and any personal property to which 
such financial assistance relates is covered by flood insurance: 
Provided, That the amount of flood insurance (1) in the case of Federal 
flood insurance, is at least equal to the development or project cost 
of the building, mobile home, or personal property (less estimated land 
cost), the outstanding principal balance of the loan, or the maximum 
limit of Federal flood insurance coverage made available with respect 
to the particular type of property, whichever is less; or (2) in the 
case of private flood insurance, is at least equal to the development 
or project cost of the building, mobile home, or personal property 
(less estimated land cost), the outstanding principal balance of the 
loan, or the maximum limit of Federal flood insurance coverage made 
available with respect to the particular type of property, whichever is 
less: Provided further, That if the financial assistance provided is in 
the form of a loan or an insurance or guaranty of a loan, the amount of 
flood insurance required need not exceed the outstanding principal 
balance of the loan and need not be required beyond the term of the 
loan. The requirement of maintaining flood insurance shall apply during 
the life of the property, regardless of transfer of ownership of such 
property.''.
            (2) Requirement for mortgage loans.--Subsection (b) of 
        section 102 of the Flood Disaster Protection Act of 1973 (42 
        U.S.C. 4012a(b)) is amended--
                    (A) by striking the subsection designation and all 
                that follows through the end of paragraph (5) and 
                inserting the following:
    ``(b) Requirement for Mortgage Loans.--
            ``(1) Regulated lending institutions.--Each Federal entity 
        for lending regulation (after consultation and coordination 
        with the Financial Institutions Examination Council established 
        under the Federal Financial Institutions Examination Council 
        Act of 1974 (12 U.S.C. 3301 et seq.)) shall by regulation 
        direct regulated lending institutions not to make, increase, 
        extend, or renew any loan secured by improved real estate or a 
        mobile home located or to be located in an area that has been 
        identified by the Administrator as an area having special flood 
        hazards and in which flood insurance has been made available 
        under the National Flood Insurance Act of 1968 (42 U.S.C. 4001 
        et seq.), unless the building or mobile home and any personal 
        property securing such loan is covered for the term of the loan 
        by flood insurance: Provided, That the amount of flood 
        insurance (A) in the case of Federal flood insurance, is at 
        least equal to the outstanding principal balance of the loan or 
        the maximum limit of Federal flood insurance coverage made 
        available with respect to the particular type of property, 
        whichever is less; or (B) in the case of private flood 
        insurance, is at least equal to the outstanding principal 
        balance of the loan or the maximum limit of Federal flood 
        insurance coverage made available with respect to the 
        particular type of property, whichever is less.
            ``(2) Federal agency lenders.--
                    ``(A) In general.--A Federal agency lender may not 
                make, increase, extend, or renew any loan secured by 
                improved real estate or a mobile home located or to be 
                located in an area that has been identified by the 
                Administrator as an area having special flood hazards 
                and in which flood insurance has been made available 
                under the National Flood Insurance Act of 1968 (42 
                U.S.C. 4001 et seq.), unless the building or mobile 
                home and any personal property securing such loan is 
                covered for the term of the loan by flood insurance in 
                accordance with paragraph (1). Each Federal agency 
                lender may issue any regulations necessary to carry out 
                this paragraph. Such regulations shall be consistent 
                with and substantially identical to the regulations 
                issued under paragraph (1).
                    ``(B) Requirement to accept flood insurance.--Each 
                Federal agency lender shall accept flood insurance as 
                satisfaction of the flood insurance coverage 
                requirement under subparagraph (A) if the flood 
                insurance coverage meets the requirements for coverage 
                under that subparagraph.
            ``(3) Government-sponsored enterprises for housing.--The 
        Federal National Mortgage Association and the Federal Home Loan 
        Mortgage Corporation shall implement procedures reasonably 
        designed to ensure that, for any loan that is--
                    ``(A) secured by improved real estate or a mobile 
                home located in an area that has been identified, at 
                the time of the origination of the loan or at any time 
                during the term of the loan, by the Administrator as an 
                area having special flood hazards and in which flood 
                insurance is available under the National Flood 
                Insurance Act of 1968 (42 U.S.C. 4001 et seq.), and
                    ``(B) purchased or guaranteed by such entity,
        the building or mobile home and any personal property securing 
        the loan is covered for the term of the loan by flood insurance 
        in the amount provided in paragraph (1). The Federal National 
        Mortgage Association and the Federal Home Loan Mortgage 
        Corporation shall accept flood insurance as satisfaction of the 
        flood insurance coverage requirement under paragraph (1) if the 
        flood insurance coverage provided meets the requirements for 
        coverage under that paragraph and any requirements established 
        by the Federal National Mortgage Association or the Federal 
        Home Loan Corporation, respectively, relating to the financial 
        strength of private insurance companies from which the Federal 
        National Mortgage Association or the Federal Home Loan Mortgage 
        Corporation will accept private flood insurance, provided that 
        such requirements shall not affect or conflict with any State 
        law, regulation, or procedure concerning the regulation of the 
        business of insurance.
            ``(4) Applicability.--
                    ``(A) Existing coverage.--Except as provided in 
                subparagraph (B), paragraph (1) shall apply on the date 
                of enactment of the Riegle Community Development and 
                Regulatory Improvement Act of 1994 (12 U.S.C. 4701 et 
                seq.).
                    ``(B) New coverage.--Paragraphs (2) and (3) shall 
                apply only with respect to any loan made, increased, 
                extended, or renewed after the expiration of the 1-year 
                period beginning on the date of enactment of the Riegle 
                Community Development and Regulatory Improvement Act of 
                1994 (12 U.S.C. 4701 et seq.). Paragraph (1) shall 
                apply with respect to any loan made, increased, 
                extended, or renewed by any lender supervised by the 
                Farm Credit Administration only after the expiration of 
                the period under this subparagraph.
                    ``(C) Continued effect of regulations.--
                Notwithstanding any other provision of this subsection, 
                the regulations to carry out paragraph (1), as in 
                effect immediately before the date of enactment of the 
                Riegle Community Development and Regulatory Improvement 
                Act of 1994 (12 U.S.C. 4701 et seq.), shall continue to 
                apply until the regulations issued to carry out 
                paragraph (1) as amended by section 522(a) of such Act 
                take effect.
            ``(5) Rule of construction.--Except as otherwise specified, 
        any reference to flood insurance in this section shall be 
        considered to include Federal flood insurance and private flood 
        insurance. Nothing in this subsection shall be construed to 
        supersede or limit the authority of a Federal entity for 
        lending regulation, the Federal Housing Finance Agency, a 
        Federal agency lender, the Federal National Mortgage 
        Association, or the Federal Home Loan Mortgage Corporation to 
        establish requirements relating to the financial strength of 
        private insurance companies from which the entity or agency 
        will accept private flood insurance, provided that such 
        requirements shall not affect or conflict with any State law, 
        regulation, or procedure concerning the regulation of the 
        business of insurance.''; and
                    (B) by striking paragraph (7) and inserting the 
                following new paragraph:
            ``(7) Definitions.--In this section:
                    ``(A) Flood insurance.--The term `flood insurance' 
                means--
                            ``(i) Federal flood insurance; and
                            ``(ii) private flood insurance.
                    ``(B) Federal flood insurance.--the term `Federal 
                flood insurance' means an insurance policy made 
                available under the National Flood Insurance Act of 
                1968 (42 U.S.C. 4001 et seq.).
                    ``(C) Private flood insurance.--The term `private 
                flood insurance' means an insurance policy that--
                            ``(i) is issued by an insurance company 
                        that is--
                                    ``(I) licensed, admitted, or 
                                otherwise approved to engage in the 
                                business of insurance in the State in 
                                which the insured building is located, 
                                by the insurance regulator of that 
                                State; or
                                    ``(II) eligible as a nonadmitted 
                                insurer to provide insurance in the 
                                home State of the insured, in 
                                accordance with sections 521 through 
                                527 of the Dodd-Frank Wall Street 
                                Reform and Consumer Protection Act (15 
                                U.S.C. 8201 through 8206);
                            ``(ii) is issued by an insurance company 
                        that is not otherwise disapproved as a surplus 
                        lines insurer by the insurance regulator of the 
                        State in which the property to be insured is 
                        located; and
                            ``(iii) provides flood insurance coverage 
                        that complies with the laws and regulations of 
                        that State.
                    ``(D) State.--The term `State' means any State of 
                the United States, the District of Columbia, the 
                Commonwealth of Puerto Rico, Guam, the Northern Mariana 
                Islands, the Virgin Islands, and American Samoa.''.
    (b) Effect of Private Flood Insurance Coverage on Continuous 
Coverage Requirements.--Section 1308 of the National Flood Insurance 
Act of 1968 (42 U.S.C. 4015) is amended by adding at the end the 
following:
    ``(n) Effect of Private Flood Insurance Coverage on Continuous 
Coverage Requirements.--For purposes of applying any statutory, 
regulatory, or administrative continuous coverage requirement, 
including under section 1307(g)(1), the Administrator shall consider 
any period during which a property was continuously covered by private 
flood insurance (as defined in section 102(b)(7) of the Flood Disaster 
Protection Act of 1973 (42 U.S.C. 4012a(b)(7))) to be a period of 
continuous coverage.''.