HUD Increases Flood Insurance Options for FHA Mortgages
The U.S. Department of Housing and Urban Development (HUD), through the Federal Housing Administration (FHA) recently announced that effective December 21, 2022, it will allow homeowners with FHA-insured mortgage financing to obtain flood insurance policies that conform to FHA requirements from private insurance providers. The change was announced through a final rule published in the Federal Register and in a companion Mortgagee Letter (both published in late November), that provide implementation guidance for FHA-approved lenders.
The FHA requires that insured mortgages for properties in Federal Emergency Management Agency (FEMA)-designated Special Flood Hazard Areas (SFHAs) have flood insurance. Previously, only flood insurance obtained through the National Flood Insurance Program (NFIP) was permissible for FHA-insured mortgages, which limited choices for consumers.
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