Loans in Areas Having Special Flood Hazards

[Federal Register Volume 60, Number 129 (Thursday, July 6, 1995)]

[Rules and Regulations]

[Pages 35286-35289]

From the Federal Register Online via the Government Publishing Office [www.gpo.gov]

[FR Doc No: 95-16199]

[[Page 35285]]

_______________________________________________________________________

Part V

Department of the Treasury

Office of the Comptroller of the Currency

12 CFR Part 22

Federal Reserve System

12 CFR Part 208

Federal Deposit Insurance Corporation

12 CFR Part 339

Department of the Treasury

Office of Thrift Supervision

12 CFR Part 563

Farm Credit Administration

12 CFR Part 614

National Credit Union Administration

12 CFR Part 760

_______________________________________________________________________

Loans in Areas Having Special Flood Hazards; Final Rule

Federal Register / Vol. 60, No. 129 / Thursday, July 6, 1995 / Rules

and Regulations

[[Page 35286]]

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 22

[Docket No. 95-12]

RIN 1557-AB47

FEDERAL RESERVE SYSTEM

12 CFR Part 208

[Regulation H, Docket No. R-0882]

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 339

RIN 3064-AB62

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 563

[No. 95-124]

RIN 1550-AA82

FARM CREDIT ADMINISTRATION

12 CFR Part 614

RIN 3052-AB57

NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 760

Loans in Areas Having Special Flood Hazards

AGENCIES: Office of the Comptroller of the Currency, Treasury (OCC);

Board of Governors of the Federal Reserve System (Board); Federal

Deposit Insurance Corporation (FDIC); Office of Thrift Supervision,

Treasury (OTS); Farm Credit Administration (FCA); and National Credit

Union Administration (NCUA) (collectively, the Federal entities for

lending regulation or the agencies).

ACTION: Joint final rule.

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SUMMARY: The OCC, Board, FDIC, OTS, and NCUA are amending their

regulations concerning loans in areas having special flood hazards to

require depository institutions to use the Standard Flood Hazard

Determination Form (the standard form) in determining whether real

property offered as collateral for a loan is located in a special flood

hazard area. The FCA is adopting this same requirement in new

regulations. The standard form has been developed by the Federal

Emergency Management Agency (the FEMA), in consultation with the

Federal entities for lending regulation and other agencies. Use of the

standard form will help ensure that borrowers obtain the required flood

insurance for improved real property and mobile homes located in

special flood hazard areas.

EFFECTIVE DATE: January 2, 1996.

FOR FURTHER INFORMATION CONTACT: OCC: Carol Workman, Compliance

Specialist, Compliance Management (202) 874-4858, Margaret Hesse,

Attorney, Community and Consumer Law Division, (202) 874-5750, or

Jacqueline L. Lussier, Senior Attorney, Legislative and Regulatory

Activities Division, Office of Chief Counsel, (202) 874-5090, Office of

the Comptroller of the Currency, 250 E Street, SW, Washington, D.C.

20219.

BOARD: Diane Jackins, Senior Review Examiner, or Jennifer Lowe,

Review Examiner, Division of Consumer and Community Affairs, (202) 452-

3946, or Lawranne Stewart, Senior Attorney, (202) 452-3513, or Rick

Heyke, Attorney, (202) 452-3688, Legal Division, Board of Governors of

the Federal Reserve System, 20th Street and Constitution Avenue, NW,

Washington, D.C. 20551.

FDIC: Mark Mellon, Senior Attorney, Regulation and Legislation

Section, Legal Division, (202) 898-3854, or Ken Baebel, Senior Review

Examiner, (202) 942-3086, or Barbara L. Boehm, Consumer Affairs

Specialist, (202) 942-3631, Division of Compliance and Consumer

Affairs, Federal Deposit Insurance Corporation, 550 17th Street, NW.,

Washington, D.C. 20429.

OTS: Larry Clark, Program Manager, Compliance Policy, (202) 906-

5628, or Catherine Shepard, Senior Attorney, Regulation and Legislation

Division, Office of the Chief Counsel, (202) 906-7275, Office of Thrift

Supervision, 1700 G Street, NW, Washington, D.C. 20552.

FCA: Robert G. Magnuson, Policy Analyst, Regulation Development,

Office of Examination, (703) 883-4498, or William L. Larsen, Senior

Attorney, Office of General Counsel, (703) 883-4020, Farm Credit

Administration, 1501 Farm Credit Drive, McLean, VA 22102-5090.

NCUA: Kimberly Iverson, Program Officer, (703) 518-6375, or Jeffrey

S. Mooney, Staff Attorney, (703) 518-6563, 1775 Duke Street,

Alexandria, VA 22314-3428.

SUPPLEMENTARY INFORMATION:

I. Background

Federal Flood Insurance Legislation

Congress enacted the National Flood Insurance Act of 1968 (the 68

Act) (Pub. L. 90-448, 82 Stat. 476) and the Flood Disaster Protection

Act of 1973 (the 73 Act) (Pub. L. 93-234, 87 Stat. 975) to provide,

through the authorization of a Federal flood insurance program, an

opportunity for property owners to purchase protection for property

subject to flooding. The 68 Act and the 73 Act are codified at 42

U.S.C. 4001 et seq.

The Reform Act

Amendments to the 68 Act and the 73 Act are set forth in the

National Flood Insurance Reform Act of 1994 (the Reform Act), Title V

of the Riegle Community Development and Regulatory Improvement Act of

1994 (Pub. L. 103-325, 108 Stat. 2160). Several of these amendments

require implementing regulations by the Federal entities for lending

regulation.\1\

\1\ One change effected by the Reform Act is to make Farm Credit

System institutions subject for the first time to the requirements

of the 68 Act and the 73 Act. See sections 1370(a)(13) of the 68 Act

(42 U.S.C. 4121(a)); and 3(a)(10) of the 73 Act (42 U.S.C.

4003(a)(10)). As a result, the FCA, the Federal entity responsible

for the supervision of such institutions, must promulgate

regulations to implement the requirements of these statutes. This

final rule is part of that project.

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As amended by the Reform Act, the 73 Act directs the Federal

entities for lending regulation (a term defined by section 3(a)(5) of

the 73 Act (42 U.S.C. 4003(a)(5)) to include the OCC, Board, FDIC, OTS,

FCA, and the NCUA) to issue regulations which direct regulated lending

institutions (a term defined by section 3(a)(10) of the 73 Act (42

U.S.C. 4003(a)(10)) to include any bank, savings and loan association,

Farm Credit System institution, and credit union) which are subject to

their supervision to ensure that any loan secured by improved real

estate or a mobile home (real property) located or to be located in a

special flood hazard area is covered for the term of the loan by flood

insurance. Section 102(b) of the 73 Act (42 U.S.C. 4012a(b)).

Standard Flood Hazard Determination Form

Section 528 of the Reform Act amends the 68 Act by adding a new

section 1365 (42 U.S.C. 4104b). Section 1365(a) of the 68 Act requires

the Director of the FEMA, in consultation with the Federal entities for

lending regulation (among others), to develop a Standard Flood Hazard

Determination Form for use in determining whether real property offered

as collateral on a loan is located in a special flood hazard area.

Section 1365(a) states that the standard form shall be established by

FEMA regulations issued not later than 270 days after the date of

enactment of the Reform Act. The Reform Act was signed

[[Page 35287]]

into law on September 23, 1994. The standard form must therefore be

established by the FEMA by no later than June 20, 1995.

A proposed rulemaking to establish the standard form was approved

for release for notice and comment by the FEMA on March 30, 1995. See

60 FR 17758 (April 7, 1995). The public comment period on the proposed

rule ended on May 8, 1995. The proposed rule was adopted by the FEMA in

final form on June 20, 1995, and is published elsewhere in today's

Federal Register.

Section 1365(c) of the 68 Act states that the Federal entities for

lending regulation must promulgate regulations which require the use of

the standard form by regulated lending institutions when determining

whether real property offered as collateral for a loan is located in a

special flood hazard area. Section 1365(c) further states that a lender

or other person may comply with this requirement by using the standard

form in a printed, computerized, or electronic manner.

Section 1365(f) of the 68 Act states that the regulations requiring

use of the standard form must be issued together with the FEMA

regulation which establishes the standard form and that the form will

have an effective date of 180 days after the date of issuance of the

regulations. To satisfy this requirement, this final rule requiring the

use of the standard form is published in the same issue of the Federal

Register as the final rule of the FEMA which establishes the standard

form.

II. The Final Rule

Notice and comment on the final rule requiring the use of the

standard form are unnecessary since the rulemaking merely implements

the statutory requirement that the standard form be used by regulated

lending institutions. The rulemaking is therefore technical in nature.

The required use of the standard form is not in need of definition or

interpretation. Moreover, the public has already had the opportunity to

comment on the substantive content and format of the standard form,

thus fulfilling the public interest in notice and comment. The final

format and content of the standard form have been determined through

the related FEMA rulemaking described above.

The Federal entities for lending regulation therefore find good

cause, in accordance with section 553(b)(B) of the Administrative

Procedure Act (5 U.S.C. 553(b)(B)), to omit notice and comment on the

rules as unnecessary and to instead issue final rules which impose the

requirement that the standard form be used by regulated lending

institutions.

III. Effective Date

The final rule will become effective January 2, 1996.

IV. Paperwork Reduction Act

As noted previously, it is the responsibility of the FEMA to

establish the standard form by regulation. The FEMA has determined that

the standard form constitutes a ``collection of information'' as that

term is defined in section 3502(4) of the Paperwork Reduction Act (the

PRA) (44 U.S.C. 3501 et seq.). See 60 FR 17760. The FEMA has submitted

information on the standard form to the Office of Management and Budget

for review as required by section 3507 of the PRA (44 U.S.C. 3507). The

Director of OMB has approved the proposed information collection

request of the FEMA, as required by section 3507.

V. Regulatory Burden

Section 302 of the Riegle Community Development and Regulatory

Improvement Act (12 U.S.C. 4802) provides that each Federal banking

agency must consider the administrative burdens and benefits of any new

regulations that impose additional requirements on insured depository

institutions. Section 302 also requires that any regulations which

impose additional reporting, disclosure, or other requirements on

insured depository institutions shall take effect on the first day of a

calendar quarter which begins on or after the date on which the

regulations are published in final form. This requirement need not be

observed, however, if a Federal statute requires that the regulation

take effect on a different date from the one mandated by section 302.

See section 302(b)(1)(C) (12 U.S.C. 4802(b)(1)(C)).

Requiring the use of the standard form will be an additional

requirement for depository institutions. Section 528 of the Reform Act

provides, however, that the standard form be used and the agencies must

implement this statutory requirement.

Moreover, as noted previously, the new section 1365(f) of the 68

Act, as added by section 528 of the Reform Act, provides that the

regulations requiring the use of the standard form shall be effective

upon the expiration of the 180-day period beginning on the date of the

regulations' issuance. Since the 68 Act requires that the regulations

requiring the use of the standard form take effect on a different date

from the one mandated by section 302, the exception in section 302 is

operative.

VI. Executive Order 12866

The OCC and the OTS have determined that this rule is not a

significant regulatory action as defined in Executive Order 12866.

VII. Unfunded Mandates Act of 1995

The OCC and the OTS have determined that the requirements of this

final rule will not result in expenditures by State, local, and tribal

governments, or by the private sector, of more than $100 million in any

one year. Accordingly, a budgetary impact statement is not required

under section 202 of the Unfunded Mandates Act of 1995.

VIII. NCUA Executive Order 12612 Statement

This rule, like the current part 760 it is replacing, will apply to

all Federally insured credit unions. The NCUA Board, pursuant to

Executive Order 12612, has determined, however, that this rule will not

have a substantial direct effect on the states, on the relationship

between the national government and the states, or on the distribution

of power and responsibilities among various levels of government.

Further, this rule will not preempt provisions of state law or

regulations.

List of Subjects

12 CFR Part 22

Flood insurance, Mortgages, National banks, Reporting and

recordkeeping requirements.

12 CFR Part 208

Accounting, Agriculture, Banks, banking, Confidential business

information, Crime, Currency, Federal Reserve System, Flood insurance,

Mortgages, Reporting and recordkeeping requirements.

12 CFR Part 339

Flood insurance, Reporting and recordkeeping requirements.

12 CFR Part 563

Accounting, Advertising, Crime, Currency, Flood insurance,

Investments, Reporting and recordkeeping requirements, Savings

associations, Securities, Surety bonds.

12 CFR Part 614

Agriculture, Banks, banking, Flood insurance, Foreign trade,

Reporting and recordkeeping requirements, Rural areas.

[[Page 35288]]

12 CFR Part 760

Credit unions, Mortgages, Flood insurance, Reporting and

recordkeeping requirements.

Office of the Comptroller of the Currency

12 CFR CHAPTER I

Authority and Issuance

For the reasons set forth in the joint preamble, part 22 of chapter

I of title 12 of the Code of Federal Regulations is amended as set

forth below:

PART 22--LOANS IN AREAS HAVING SPECIAL FLOOD HAZARDS

1. The authority citation for part 22 is revised to read as

follows:

Authority: 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128.

2. A new Sec. 22.6 is added to read as follows:

Sec. 22.6 Required use of Standard Flood Hazard Determination Form.

A bank shall use the standard flood hazard determination form

developed by the Director of the Federal Emergency Management Agency

(the FEMA) (as set forth in appendix A of 44 CFR part 65) when

determining whether improved real estate or a mobile home offered as

collateral security for a loan is located in an area identified by the

Director of the FEMA as having special flood hazards and in which flood

insurance has been made available under the National Flood Insurance

Act of 1968 (12 U.S.C. 4001 et seq.). The standard flood hazard

determination form may be used in a printed, computerized, or

electronic manner.

Dated: June 20, 1995.

Eugene A. Ludwig,

Comptroller of the Currency.

FEDERAL RESERVE SYSTEM

12 CFR CHAPTER II

For the reasons set forth in the joint preamble, the Board amends

12 CFR Part 208 as set forth below:

PART 208--MEMBERSHIP OF STATE BANKING INSTITUTIONS IN THE FEDERAL

RESERVE SYSTEM (REGULATION H)

1. The authority citation for part 208 is revised to read as

follows:

Authority: 12 U.S.C. 36, 248(a), 248(c), 321-338a, 371d, 461,

481-486, 601, 611, 1814, 1823(j), 1828(o), 1831o, 1831p-1, 3105,

3310, 3331-3351, and 3906-3909; 15 U.S.C. 78b, 781(b), 781(g),

781(j), 78o-4(c)(5), 78q, 78q-1, and 78w; 31 U.S.C. 5318; 42 U.S.C.

4012a, 4104a, 4104b, 4106, and 4128.

2. Section 208.8 is amended by adding a new paragraph (e)(4) to

read as follows:

Sec. 208.8 Banking practices.

* * * * *

(e) * * *

(4) Required use of Standard Flood Hazard Determination Form. A

state member bank shall use the standard flood hazard determination

form developed by the Director of the Federal Emergency Management

Agency (the FEMA) (as set forth in Appendix A of 44 CFR Part 65) when

determining whether improved real estate or a mobile home offered as

collateral security for a loan is located in an area identified by the

Director of the FEMA as having special flood hazards and in which flood

insurance has been made available under the National Flood Insurance

Act of 1968. The standard flood hazard determination form may be used

in a printed, computerized, or electronic manner.

* * * * *

By order of the Board of Governors of the Federal Reserve

System, June 20, 1995.

William W. Wiles,

Secretary of the Board.

Federal Deposit Insurance Corporation

12 CFR CHAPTER III

Authority and Issuance

For the reasons set forth in the joint preamble, the Board of

Directors of the FDIC amends Part 339 of Chapter III of title 12 of the

Code of Federal Regulations as follows:

PART 339--LOANS IN AREAS HAVING SPECIAL FLOOD HAZARDS

1. The authority citation for part 339 is revised to read as

follows:

Authority: 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128.

2. Section 339.7 is added to read as follows:

Sec. 339.7 Required use of Standard Flood Hazard Determination Form.

A bank shall use the standard flood hazard determination form

developed by the Director of the Federal Emergency Management Agency

(the FEMA) (as set forth in Appendix A of 44 CFR Part 65) when

determining whether improved real estate or a mobile home offered as

collateral security for a loan (as that term is defined in

Sec. 339.2(b)) is located in an area identified by the Director of the

FEMA as having special flood hazards and in which flood insurance has

been made available under the National Flood Insurance Act of 1968. The

standard flood hazard determination form may be used in a printed,

computerized, or electronic manner.

By order of the Board of Directors.

Dated at Washington, D.C., this 19th day of June, 1995.

Federal Deposit Insurance Corporation.

Jerry L. Langley,

Executive Secretary.

Office of Thrift Supervision

12 CFR CHAPTER V

Authority and Issuance

Accordingly, for the reasons set forth in the joint preamble, the

Office of Thrift Supervision hereby amends chapter V, title 12 of the

Code of Federal Regulations, as set forth below:

SUBCHAPTER D--REGULATIONS APPLICABLE TO ALL SAVINGS ASSOCIATIONS

PART 563--OPERATIONS

1. The authority citation for part 563 is revised to read as

follows:

Authority: 12 U.S.C. 375b, 1462, 1462a, 1463, 1464, 1467a, 1468,

1817, 1828, 3806; 42 U.S.C. 4012a, 4104a, 4104b, 4106, 4128.

2. Section 563.48 is amended by adding a new paragraph (f) to read

as follows:

Sec. 563.48 Flood disaster protection.

* * * * *

(f) Required use of Standard Flood Hazard Determination Form. A

savings association shall use the standard flood hazard determination

form developed by the Director of the Federal Emergency Management

Agency (the FEMA) (as set forth in Appendix A of 44 CFR Part 65) when

determining whether improved real estate or a mobile home offered as

collateral security for a loan is located in an area identified by the

Director of the FEMA as having special flood hazards and in which flood

insurance has been made available under the National Flood Insurance

Act of 1968. The standard flood hazard determination form may be used

in a printed, computerized, or electronic manner.

Dated: June 16, 1995.

By the Office of Thrift Supervision.

John F. Downey,

Director, Supervision.

Farm Credit Administration

12 CFR Chapter VI

Authority and Issuance

For the reasons stated in the joint preamble, part 614 of chapter

VI, title 12 of the Code of Federal Regulations is amended as follows:

[[Page 35289]]

PART 614--LOAN POLICIES AND OPERATIONS

1. The authority citation for part 614 is revised to read as

follows:

Authority: 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128; 1.3,

1.5, 1.6, 1.7, 1.9, 1.10, 2.0, 2.2, 2.3, 2.4, 2.10, 2.12, 2.13,

2.15, 3.0, 3.1, 3.3, 3.7, 3.8, 3.10, 3.20, 3.28, 4.12, 4.12A, 4.13,

4.13B, 4.14, 4.14A, 4.14C, 4.14D, 4.14E, 4.18, 4.19, 4.36, 4.37,

5.9, 5.10, 5.17, 7.0, 7.2, 7.6, 7.7, 7.8, 7.12, 7.13, 8.0, 8.5 of

the Farm Credit Act (12 U.S.C. 2011, 2013, 2014, 2015, 2017, 2018,

2071, 2073, 2074, 2075, 2091, 2093, 2094, 2096, 2121, 2122, 2124,

2128, 2129, 2131, 2141, 2149, 2183, 2184, 2199, 2201, 2202, 2202a,

2202c, 2202d, 2202e, 2206, 2207, 2219a, 2219b, 2243, 2244, 2252,

2279a, 2279a-2, 2279b, 2279b-1, 2279b-2, 2279f, 2279f-1, 2279aa,

2279aa-5); sec. 413 of Pub. L. 100-233, 101 Stat. 1568, 1639.

2. Part 614 is amended by adding a new subpart S to read as

follows:

Subpart S--Flood Insurance Requirements

Sec.

614.4940 Required use of Standard Flood Hazard Determination Form

Subpart S--Flood Insurance Requirements

Sec. 614.4940 Required use of Standard Flood Hazard Determination

Form.

An institution of the Farm Credit System shall use the standard

flood hazard determination form developed by the Director of the

Federal Emergency Management Agency (the FEMA) (as set forth in

Appendix A of 44 CFR part 65) when determining whether improved real

estate or a mobile home offered as collateral security for a loan is

located in an area identified by the Director of the FEMA as having

special flood hazards and in which flood insurance has been made

available under the National Flood Insurance Act of 1968. The standard

flood hazard determination form may be used in a printed, computerized,

or electronic manner.

Dated: June 16, 1995.

Floyd Fithian,

Secretary, Farm Credit Administration Board.

NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Chapter VII

Authority and Issuance

For the reasons set forth in the joint preamble, the NCUA amends 12

CFR Part 760 as follows:

PART 760--FLOOD INSURANCE

1. The authority citation for part 760 is revised to read as

follows:

Authority: 12 U.S.C. 1757, 1789; 42 U.S.C. 4012a, 4104a, 4104b,

4106, and 4128.

2. Section 760.12 is added to read as follows:

Sec. 760.12 Required use of Standard Flood Hazard Determination Form

A credit union shall use the standard flood hazard determination

form developed by the Director of the Federal Emergency Management

Agency (the FEMA) (as set forth in Appendix A of 44 CFR Part 65) when

determining whether improved real estate or a mobile home offered as

collateral security for a loan is located in an area identified by the

Director of the FEMA as having special flood hazards and in which flood

insurance has been made available under the National Flood Insurance

Act of 1968. The standard flood hazard determination form may be used

in a printed, computerized, or electronic manner.

By the National Credit Union Administration Board on June 26,

1995.

Becky Baker,

Secretary of the Board.

[FR Doc. 95-16199 Filed 7-5-95; 8:45 am]

BILLING CODES 4810-33-P; 6210-01-P; 6714-01-P; 6720-01-P; 6705-01-P;

7535-01-P