On October 1, the federal prudential regulators and the Farm Credit Administration issued a joint reminder of a 2022 guidance (Interagency Questions and Answers Regarding Flood Insurance) that lenders may continue to make loans subject to federal flood insurance statutes even if the National Flood Insurance Program (NFIP) is unavailable. The agencies clarified that, during an NFIP lapse, lenders are not required to obtain federal flood insurance coverage for affected loans.

The regulators stated lenders must still “continue to make flood determinations; provide timely, complete, and accurate notices to borrowers; and comply with other applicable parts of the flood insurance regulations.” Lenders were also advised to evaluate safety and soundness as well as legal risks and to “prudently” manage those risks during the lapse period. The joint reminder directed stakeholders to the guidance, specifically to the “Q&A Applicability 12” section.