The final version of a form banks will use to determine whether flood insurance is required on a property is due June 19 from the Federal Emergency Management Agency.
Under a law passed last year, banks are required to find out if land they are lending on is located in a flood hazard area. If it is, banks must require borrowers to purchase flood insurance
The form, which is one page with another page of instructions, is supposed to help banks comply with the National Flood Insurance Reform Act of 1994. By using it along with a map that shows which areas of the country are flood hazards, banks will be able to determine if they are responsible for requiring borrowers to buy insurance.
Lenders first must give information on the loan itself, such as when and where it was made and the nature of the collateral. They then have to show whether the loan is in a flood hazard area, and if federal flood insurance is available in that location.
The form was published in March as a proposed rule; comments were taken until May. According to agency spokeswoman Tere Martin, the final form will closely resemble the proposal.
Banks will start using the form internally in December.