A brochure on the basics of FEMA, flood searches, and flood insurance for attorneys, lenders , realtors and home owners

2. What is the Federal Emergency
Management Agency?
The Federal Emergency Management Agency (more familiarly
referred to as FEMA) was founded in 1979 during the Carter
administration. FEMA has assisted Americans during all types of
disasters, including hurricanes, floods, earthquakes, toxic spills,
nuclear power plant meltdowns, etc.. The formation of FEMA
created an umbrella organization to oversee implementation of
policies, procedures and disaster relief that in the past had been
haphazardly provided by numerous agencies and organizations at
the local, state and federal levels.

3. cont.
By 2003, in the post 911 era, FEMA came under the control of the
Department of Homeland Security. There has been much criticism
of the agency in the way it handled Hurricane Katrina (2005) and
Hurricane Sandy (2012). Its failure to provide adequate services
during those two major disasters contributed greatly to Congress’s
push to implement a major overhaul of FEMA. While, for the time
being, it will remain a part of the Department of Homeland Security,
its long-term future is still uncertain.

4. What is FEMA’s role with flood
management ?
FEMA administers the National Flood Insurance Program (NFIP). The
NFIP is a Federal program which provides owners in participating
communities a way of purchasing flood insurance. The program
requires state and local governments to enforce floodplain
management regulations as a way of reducing future flood damages.

5. cont.
FEMA’s staff offers technical assistance and training workshops.
They also make visits to neighborhoods and meet with community
officials. Also, FEMA staff provide technical assistance to owners
and real estate service providers (such as architects, builders,
contractors, etc.) and other NFIP constituents on requirements and
mitigation measures. FEMA also produces informative literature
about the NFIP and ways to minimize or eliminate future flood
damages.
The NFIP has a pivotal role in encouraging municipalities to adopt
and enforce floodplain management regulations. It also encourages
municipalities to implement broader floodplain management
programs.

6. cont.
Floodplain management is essential to reducing flood
losses. Floodplain management is broadly defined to
include all actions that states and local municipalities
can take to reduce flood damage to both new and
existing buildings and infrastructure. FEMA can only
provide flood insurance to those States or
municipalities that adopt and enforce floodplain
management regulations that meet or exceed minimum
NFIP requirements.

7. How does FEMA manage flood risk?
NFIP requirements are incorporated into municipal zoning codes,
subdivision ordinances, and building codes. Some municipalities
adopt specific floodplain management ordinances. NFIP
requirements apply to areas mapped by FEMA as Special Flood
Hazard Areas (SFHA) on Flood Insurance Rate Maps (FIRMs).
The SFHA is the area that would be flooded by the "base flood"
(defined as the flood that has a 1 percent chance of occurring in
any given year; also known as the "100-year flood").

8.
A sample Flood Zone
Map showing different
zone designations for
a particular geographic
area

9. cont.
The NFIP requirements include:
•Elevation of new and substantially improved residential
structures above the base flood level.
•Elevation or dry floodproofing (made watertight) of new or
substantially improved non-residential structures.
•Prohibition of development in floodways, the central portion of a
riverine floodplain needed to carry deeper and faster moving
water.
•Additional requirements to protect buildings in coastal areas
from the impacts of waves, high velocity, and storm surge.

10. cont.
The NFIP requirements are the most cost-effective way to
reduce the flood risk to new buildings and infrastructure.
Experience demonstrates that structures built to NFIP standards
experience 80 percent less damage than structures not built to
these standards and have resulted in $1.2 billion per year in
reduced flood losses.
Also, NFIP’s substantial improvement and substantial damage
requirement ensures that flood protection measures are
integrated in structures built before FIRMs were developed. The
test to determine if a building is considered substantially
improved or substantially damaged is when the cost of improving
or repairing the building equals or exceeds 50 percent of the its
market value . When this occurs, the community must ensure
that the NFIP requirements are applied so that they are protected
from future flood damages.

11. Some of the Benefits of Working With FEMA
NFIP provides financial assistance for owners who suffer damage
to existing buildings. This aid is given under the Increased Cost
of Compliance (ICC) Coverage. The program provides property
owners up to $30,000 when a building is declared substantially or
repetitively damaged.
FEMA also provides grants and technical assistance to states
and other municipalities to conduct mitigation planning and
implement mitigation projects.

12. cont.
Communities that establish floodplain management programs
exceeding the NFIP minimum requirements are eligible to receive
discounts on flood insurance premiums.

13. FEMA- FLOOD HAZZARD
DETERMINATION FORM ( SHHDF)-
What is it ?
• The Standard Flood Hazard Determination Form (SFHDF) is
required for all federally backed loans
• Used by lenders to determine flood risk for building loans.
• The SFHDF is authorized by the National Flood Insurance
Reform Act of 1994 (NFIRA) and is imposed on lenders by
their regulatory entities, not by FEMA.

14. cont.
•FEMA oversees the National Flood Insurance Program (NFIP)
which makes federally administered flood insurance available
throughout the United States and is responsible for
development, updates and making the flood determination form
available to users.
•Lenders will require a flood certification on all loans secured by
residential real estate.
•A flood certification indicates if the subject property is located
within a designated flood zone.

15. cont.
•If the property is located within a flood zone, the borrower must
obtain flood insurance.
•Real Estate attorneys will want to see a flood zone
determination search during contract review, because the
finding of the search may affect whether or not the buyer wants
to proceed with the purchase.

16. What are the types of flood zones that
will be returned on a SFHDF ?
• A flood zone certification search will be provided by a flood
search certification company on a Special Flood Hazzard
Determination Form ( SFHDF) [ a sample of the form follows
on the slide after next]
• According to FEMA and the National Flood Insurance
Program, any building located in an A or V zone is
considered to be in a Special Flood Hazard Area, and is
lower than the Base Flood Elevation.

17. cont.
·V zones are the most hazardous of the Special Flood Hazard
Areas. Flood insurance is mandatory in V zone areas.
·Zone C and Zone X are areas determined to be outside 500-
year floodplain and determined to be outside the 1% and 0.2%
annual chance floodplains.
To see a complete list of flood zone designations CLICK HERE.

18. FEMA- FLOOD HAZZARD
DETERMINATION FORM ( SHHDF)-
Instructions
Double Click Form to Enlarge
Instructions-Page 1
Double Click Form to Enlarge
Instructions-Page 2

19. FEMA- FLOOD HAZZARD
DETERMINATION FORM ( SHHDF)-
FORM
Double Click Form to Enlarge

20. FLOOD INSURANCE – The Basics
• It is important for home owners to know that a home owner’s
insurance policy does not provide flood insurance coverage. A
property owner must purchase a separate flood insurance
policy if he/she wants or is required to have such coverage.
•An institutional lender will require a purchaser to obtain flood
insurance if the property is located in a Special Flood Hazzard
Area ( SFHA).

21. cont.
• Mortgage lenders require flood insurance coverage, because
without a policy the lender is unable to meet Fannie Mae
requirements, thereby prohibiting the loan to be sold on the
secondary mortgage market.
•Fannie Mae requires flood insurance coverage when any part
of a dwelling, residential building ,structure or improvement lies
within a SFHA.

22. Cont.
•Mortgages made by owners of properties located in
communities that participate in the NFIP program are eligible for
purchase by Fannie Mae provided that the flood insurance
coverage meets the higher NFIP Regular Program limits .
•The coverage provided by the NFIP Emergency Program is
limited and therefore the borrower will need to purchase private
insurance or a supplemental policy in addition to the NFIP
policy in order to meet Fannie Mae requirements.

23. Cont.
•The terms and conditions of the flood insurance coverage must
be at least equivalent to the terms and conditions of coverage
provided under the standard policy of the NFIP for the
appropriate property type.
• The Policy Declaration page of a policy is acceptable evidence
of coverage.

24. Cont.
•The amount of flood insurance provided by the NFIP or by a
private insurer must meet Fannie Mae's minimum coverage
requirements for the appropriate property type.
•Private carriers must meet Fannie Mae's minimum rating
requirements for insurance underwriters.

25. cont.
•Fannie Mae sets a minimum amount of flood insurance
coverage required for most first mortgages secured by one- to
four-unit properties, individual PUD units, and certain individual
condo units.
•The amount of coverage must be whichever is the lowest of: a)
100% of the replacement cost of the insurable value of the
improvements; b) the maximum insurance available from the
NFIP, which is currently $250,000 per dwelling; or c) the unpaid
principal balance of the mortgage.

26. Cont.
•Flood insurance policy premium varies depending on the risk
level, as determined by the flood zone designation. The
national average premium is $700.00, however pricing can vary
dramatically – less for properties in low to moderate risk areas
compared to properties located in higher risk areas.
•Not all insurance companies offer flood insurance policies.
•NFIP provides a referral service for property owners to locate
companies which provide flood insurance coverage.

27. Flood Searches – Provided by Title
Insurance Companies
• The flood search is typically provided as a courtesy service by
the title insurance company, as requested by the lender.
• Flood conditions do not affect title to real property. Therefore,
flood searches are beyond the scope of title insurance and it
is prohibited for a title insurance company to provide any type
of coverage in a policy.

28. cont.
•Ideally, it is best for the title insurance company to report the
flood search separately from the title insurance commitment,
but it is customary to see the search incorporated within the
commitment as is often preferred. To clearly indicate that the
title insurance company is not providing any form of coverage
for the results of the search, the title insurance commitment will
typically contain a clause similar to the following:
“Flood search is enclosed herein for informational
purposes only and no liability is assumed by reason
thereof.”

29. More Info . . .
•For more information please visit the FEMA web site :
www.fema.gov

30. This guide was written and produced by Michael J. Moore, Esq. of CB Title Group, Inc. and
Moore Title Services, Inc. . The information has been obtained from various web sites,
primarily from the web site maintained by FEMA ( www.fema.gov). A good deal of the
content herein is also based on personal professional experience for the past 25 years in the
title insurance industry.
Please feel free to contact Mr. Moore for any title search and title insurance needs, primarily
in New Jersey and New York. He can be contacted directly by email: mmooreesq@aol.com
For more detailed information about his professional background, please visit his LinkedIn profile at :
https://www.linkedin.com/in/michaeljmooreesq/