Do all lenders require flood insurance on properties?
Federal Law requires all lenders to investigate whether homes they finance are in a special flood hazard area as defined the Federal Emergency Management Agency (FEMA). The law can’t stop floods, but the Flood Disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994 help to ensure that you will be protected from financial losses caused by flooding. The lender will use a third-party company who specializes in reviewing flood maps prepared by FEMA to determine if your home is located in a flood area. If it is, flood insurance coverage will be required, since standard homeowner’s insurance doesn’t protect you against damages from flooding.
