I
103D CONGRESS
2D SESSION
H. R. 4125
To improve the national flood insurance program to increase the stability
of the National Flood Insurance Fund through improved risk manage-
ment, enhanced compliance, and incentives for mitigation, and for other
purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 24, 1994
Mr. HUGHES (for himself and Mr. SAXTON) introduced the following bill;
which was referred to the Committee on Banking, Finance and Urban Affairs
A BILL
To improve the national flood insurance program to increase
the stability of the National Flood Insurance Fund
through improved risk management, enhanced compli-
ance, and incentives for mitigation, and for other
purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Flood Insurance Risk Management Act of 1994’’.
(b) TABLE OF CONTENTS.—
Sec. 1. Short title and table of contents.
Sec. 2. Definitions.
TITLE I—COMPLIANCE AND INCREASED PARTICIPATION
Sec. 101. Existing flood insurance purchase requirements.
Sec. 102. Expanded flood insurance purchase requirements.
Sec. 103. Escrow of flood insurance payments.
Sec. 104. Placement of flood insurance by lenders.
Sec. 105. Penalties for failure to require flood insurance or notify.
Sec. 106. Ongoing compliance with flood insurance purchase requirements.
Sec. 107. Fees for determining applicability of flood insurance purchase re-
quirements.
Sec. 108. Notice requirements.
Sec. 109. Standard hazard determination forms.
Sec. 110. Examinations regarding compliance.
Sec. 111. Financial Institutions Examination Council.
Sec. 112. Clerical amendments.
TITLE II—FLOOD INSURANCE PREMIUM RATES AND COVERAGE
AMOUNTS
Sec. 201. Preference for charging actuarial rates.
Sec. 202. Community rating system and incentives for flood damage mitigation
measures.
Sec. 203. Community premium-pooling program.
Sec. 204. Maximum flood insurance coverage amounts.
Sec. 205. Study of economic effects of charging actuarially-based premium
rates for pre-firm structures.
Sec. 206. GAO study of economic impact of erosion hazard areas.
TITLE III—REVOLVING LOAN FUND FOR FLOOD AND EROSION
DAMAGE MITIGATION ACTIVITIES AND ADDITIONAL MITIGA-
TION COVERAGE
Sec. 301. Flood and Erosion Risk Management Fund.
Sec. 302. Flood insurance premium surcharges.
Sec. 303. Additional coverage for mitigation activities.
TITLE IV—MISCELLANEOUS PROVISIONS
Sec. 401. Extension of flood insurance program.
Sec. 402. Termination of erosion-threatened structures program.
Sec. 403. Limitations on claims for repetitively damaged structures.
Sec. 404. Penalties for repetitive claims.
Sec. 405. Flood insurance program arrangements with private insurance enti-
ties.
Sec. 406. Authorization of appropriations.
SEC. 2. DEFINITIONS.
(a) FLOOD DISASTER PROTECTION ACT OF 1973.—
Section 3(a) of the Flood Disaster Protection Act of 1973
(42 U.S.C. 4003(a)) is amended—
(1) by striking paragraph (5) and inserting the
following new paragraph:
‘‘(5) ‘Federal entity for lending regulation’
means the Board of Governors of the Federal Re-
serve System, the Federal Deposit Insurance Cor-
poration, the Comptroller of the Currency, the Office
of Thrift Supervision, and the National Credit
Union Administration, and with respect to a particu-
lar regulated lending institution means the entity
primarily responsible for the supervision, approval,
or regulation of the institution;’’;
(2) in paragraph (6), by striking the period at
the end and inserting a semicolon; and
(3) by inserting after paragraph (6) the follow-
ing new paragraphs:
‘‘(7) ‘Federal agency lender’ means a Federal
agency that makes direct loans secured by improved
real estate or a mobile home, to the extent such
agency acts in such capacity;
‘‘(8) ‘lender’ includes any regulated lending in-
stitution, other lending institution, and Federal
agency lender, but does not include any agency en-
gaged primarily in the purchase of mortgage loans;
‘‘(9) ‘other lending institution’ means any lend-
ing institution that is not subject to the supervision,
approval, regulation, or insuring of any Federal en-
tity for lending regulation and that is not a Federal
agency lender, but does not include institutions en-
gaged primarily in the purchase of mortgage loans;
‘‘(10) ‘regulated lending institution’ means any
bank, savings and loan association, credit union, or
similar institution subject to the supervision, ap-
proval, regulation, or insuring of a Federal entity for
lending regulation; and
‘‘(11) ‘servicer’ means the person responsible
for receiving any scheduled periodic payments from
a borrower pursuant to the terms of a loan, includ-
ing amounts for taxes, insurance premiums, and
other charges with respect to the property, and mak-
ing the payments of principal and interest and such
other payments with respect to the amounts received
from the borrower as may be required pursuant to
the terms of the loan.’’.
(b) NATIONAL FLOOD INSURANCE ACT OF 1968.—
Section 1370(a) of the National Flood Insurance Act of
1968 (42 U.S.C. 4121(a)) is amended—
(1) in paragraph (5), by striking ‘‘and’’ at the
end;
(2) in paragraph (6), by striking the period at
the end and inserting a semicolon; and
(3) by inserting after paragraph (6) the follow-
ing new paragraphs:
‘‘(7) the term ‘coastal’ means relating to the
coastlines and bays of the tidal waters of the United
States or the shorelines of the Great Lakes, but does
not refer to bayous, riverine areas, and riverine por-
tions of estuaries;
‘‘(8) the term ‘Federal agency lender’ means a
Federal agency that makes direct loans secured by
improved real estate or a mobile home, to the extent
such agency acts in such capacity;
‘‘(9) the term ‘Federal entity for lending regu-
lation’ means the Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance Cor-
poration, the Comptroller of the Currency, the Office
of Thrift Supervision, and the National Credit
Union Administration, and with respect to a particu-
lar regulated lending institution means the entity
primarily responsible for the supervision, approval,
or regulation of the institution;
‘‘(10) the term ‘lender’ includes any regulated
lending institution, other lending institution, and
Federal agency lender, but does not include any
agency engaged primarily in the purchase of mort-
gage loans;
‘‘(11) the term ‘natural and beneficial flood-
plain functions’ means (A) the functions associated
with the natural or relatively undisturbed floodplain
that moderate flooding, retain flood waters, reduce
erosion and sedimentation, and mitigate the effect of
waves and storm surge from storms;
‘‘(12) the term ‘regulated lending institution’
means a bank, savings and loan association, credit
union, or similar institution subject to the super-
vision, approval, regulation, or insuring of a Federal
entity for lending regulation;
‘‘(13) the term ‘other lending institution’ means
any lending institution that is not subject to the su-
pervision, approval, regulation, or insuring of any
Federal entity for lending regulation and that is not
a Federal agency lender, but does not include insti-
tutions engaged primarily in the purchase of mort-
gage loans; and
‘‘(14) the term ‘servicer’ means the person re-
sponsible for receiving any scheduled periodic pay-
ments from a borrower pursuant to the terms of a
loan, including amounts for taxes, insurance pre-
miums, and other charges with respect to the prop-
erty, and making the payments of principal and in-
terest and such other payments with respect to the
amounts received from the borrower as may be re-
quired pursuant to the terms of the loan.’’.
(c) CONFORMING AMENDMENTS.—
(1) FLOOD
DISASTER
PROTECTION
ACT
OF
1973.—Section 202(b) of the Flood Disaster Protec-
tion Act of 1973 (42 U.S.C. 4106(b)) is amended by
striking ‘‘Federal instrumentality described in such
section shall by regulation require the institutions’’
and inserting ‘‘Federal entity for lending regulation
(with respect to regulated lending institutions), the
Secretary of Housing and Urban Development (with
respect to other lending institutions), and the appro-
priate head of each Federal agency lender, shall by
regulation require the lenders’’.
(2) NATIONAL
FLOOD
INSURANCE
ACT
OF
1968.—Section 1322(d) of the National Flood Insur-
ance Act of 1968 (42 U.S.C. 4029(d)) is amended
by striking ‘‘federally supervised, approved, regu-
lated or insured financial institution’’ and inserting
‘‘regulated lending institution, other lending institu-
tion, or Federal agency lender’’.
TITLE I—COMPLIANCE AND
INCREASED PARTICIPATION
SEC. 101. EXISTING FLOOD INSURANCE PURCHASE RE-
QUIREMENTS.
Section 102(a) of the Flood Disaster Protection Act
of 1973 (42 U.S.C. 4012a(a)) is amended—
(1) by inserting after ‘‘(a)’’ the following: ‘‘RE-
QUIREMENT FOR FEDERAL ASSISTANCE FOR ACQUI-
SITION OR CONSTRUCTION.—’’; and
(2) by adding at the end the following new sen-
tence: ‘‘This subsection may not be construed to per-
mit the provision of any amount of financial assist-
ance with respect to any building or mobile home
and related personal property for which flood insur-
ance is required under this subsection, unless the re-
quirements under this subsection are complied with
in full. The prohibitions and requirements of this
subsection relating to financial assistance may not
be waived for any purpose.’’.
SEC. 102. EXPANDED FLOOD INSURANCE PURCHASE RE-
QUIREMENTS.
Section 102(b) of the Flood Disaster Protection Act
of 1973 (42 U.S.C. 4012a(b)) is amended to read as fol-
lows:
‘‘(b) REQUIREMENT FOR MORTGAGE LOANS.—
‘‘(1) REGULATED
LENDING
INSTITUTIONS.—
Each Federal entity for lending regulation (after
consultation and coordination with the Financial In-
stitutions Examination Council established under the
Federal Financial Institutions Examination Council
Act of 1974) shall by regulation direct regulated
lending institutions not to make, increase, extend, or
renew, after the expiration of 60 days following the
date of the enactment of this Act, 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 Director as an area having special flood hazards
and in which flood insurance has been made avail-
able under the National Flood Insurance Act of
1968, 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 an
amount at least equal to the outstanding principal
balance of the loan or the maximum limit of cov-
erage made available under the Act with respect to
the particular type of property, whichever is less.
‘‘(2) OTHER
LENDING
INSTITUTIONS.—The
Secretary of Housing and Urban Development (after
consultation and coordination with the Financial In-
stitutions Examination Council) shall by regulation
direct that—
‘‘(A) any other lending institution may not
make, increase, extend, or renew any loan se-
cured by improved real estate consisting of a 1-
to 4-family residence or a mobile home located
or to be located in an area that has been identi-
fied by the Director of the Federal Emergency
Management Agency as an area having special
flood hazards and in which flood insurance has
been made available under the National Flood
Insurance Act of 1968, unless the building or
mobile home and any personal property secur-
ing such loan is covered for the term of the loan
by flood insurance in the amount provided in
paragraph (1); and
‘‘(B) any loan that is—
‘‘(i) secured by improved real estate
or a mobile home located in an area that
has been identified at the time of the origi-
nation of the loan by the Director of the
Federal Emergency Management Agency,
as an area of special flood hazards and in
which flood insurance is available under
the National Flood Insurance Act of 1968,
and
‘‘(ii) purchased by the Government
National Mortgage Association,
is covered for the term of the loan by flood in-
surance in the amount provided in paragraph
(1).
‘‘(3) FEDERAL AGENCY LENDERS.—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 Director of the Fed-
eral Emergency Management Agency as an area
having special flood hazards and in which flood in-
surance has been made available under the National
Flood Insurance Act of 1968, 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 the amount provided in paragraph (1).
The relevant head of each Federal agency lender
shall issue any regulations necessary to carry out
this paragraph. Such regulations shall be consistent
with and substantially identical to the regulations is-
sued under paragraphs (1) and (2).
(b) NATIONAL FLOOD INSURANCE FUND.—Section
1310 of the National Flood Insurance Act of 1968 (42
U.S.C. 4017) is amended—
(1) in subsection (a), by inserting after para-
graph (5) (as added by section 202(b)(3) of this
Act) the following new paragraph:
‘‘(6) for making loans to the Flood and Erosion
Risk Management Fund, subject to the provisions of
section 1365(e); and’’; and
(2) in subsection (b), by inserting after para-
graph (6) (as added by section 105(b)(3) of this
Act) the following new paragraph:
‘‘(7) repayments of amounts borrowed under
section 1365(e) and interest on such amounts;’’.
SEC. 302. FLOOD INSURANCE PREMIUM SURCHARGES.
Section 1308 of the National Flood Insurance Act of
1968 (42 U.S.C. 4015) is amended by adding at the end
the following new subsection:
‘‘(e) INSURANCE PREMIUM SURCHARGES FOR FLOOD
RISK MANAGEMENT.—
‘‘(1) MANDATORY
ONE-TIME
SURCHARGE.—
Notwithstanding any other provision of this title, the
Director shall assess, with respect to each contract
for flood insurance coverage under this title issued
or renewed after the date of the enactment of the