Legislation that would allow lenders to force-place flood insurance on borrowers in designated flo seems headed for congressional approval, and lenders compelled to use that new authorization should Federal Emergency Management Agency has upped the premium ante on structures insured under the Natio Flood Insurance Program.

The agency announced it will increase the NFIP chargeable subsidized rates that apply to all struc communities participating in the NFIP emergency program, and also to certain structures in communiti regular program. The final rule, published in the May 24 Federal Register, becomes effective Oct. 1,

FEMA's rates for residential structures, based on rates per-year, per-$100 coverage, will increase $0.55; insurance on the contents of those residential structures increases to $0.70 from $0.65. The propertie's, including hotels and motels with normal occupancy of less than six months, will increas $0.65 for structures, and to $1.40 from $1.30 for contents.

The flood legislation, H.R. 3191 in the House, S. 1275 in the Senate, will have to be sent to conf likely in June or July. The bill is intended to compensate NFIP for the repeated shortfalls it has s and under-insured homeowners have depleted the fund.

NFIP, which is essentially the nation's only provider of flood insurance for homes and businesses, subsidized rates, requires force-placed flood insurance in some instances for homeowners in flood-pr do not regularly buy flood insurance--but enforcement has been lax. The proposed law would require l servicers to ensure coverage.

But if the legislation is passed, disclosure to affected homeowners about the rate increase--or an increases--is likely to fall not with lenders, but with the FEMA-contracted insurance companies--suc Insurance Co. of America, which perform the servicing functions for the program, said FEMA's Joe Cou executive assistant to the administrator, Federal Insurance Administration. He said that has been th some rare FEMA force-place insurance programs now operating.

"We have a series of messages that will tell the borrower what [the policies and policy increases] Coughlin said. The insurance companies have a contractual obligation with FEMA to deliver such messa agency has no such relationship with lenders. But, he added, the lenders may want to contact their r insurance contractor to work out the details of disclosure responsibilities should such legislation

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