Supporting Statement_3133-0190_6.5.24 OCFP_CLEAN

7National Credit Union Administration

SUPPORTING STATEMENT

Loans in Areas Having Special Flood Hazards

12 CFR part 760

OMB Control No. 3133-0190

Summary of Action:

There have been no updates to 12 CFR Part 760 since the final rule published February 20, 2019, at 84 FR 4953. In that 2019 final rule the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Farm Credit Administration, and the National Credit Union Administration (the Agencies) amended their regulations regarding loans in areas having special flood hazards to implement the private flood insurance provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 (Biggert-Waters Act).¹

A. JUSTIFICATION

1. Circumstances that make the collection necessary.

This collection of information is set forth in NCUA regulations at 12 CFR Part 760 and is required by the National Flood Insurance Act of 1968 (1968 Act)² and the Flood Disaster Protection Act of 1973 (FDPA),³ as amended, (the Federal flood insurance statutes) which govern the National Flood Insurance Program (NFIP).⁴ These laws make Federally subsidized flood insurance available to owners of improved real estate or mobile homes located in participating communities and require the purchase of flood insurance in connection with a loan made by a regulated lending institution⁵ when the loan is secured by improved real estate or a mobile home located in special flood hazard areas (SFHA) in which flood insurance is available under the NFIP.⁶ The Agencies each have issued regulations implementing these statutory requirements for the lending institutions they supervise.⁷ The Biggert-Waters Act amended the NFIP requirements that the Agencies have authority to implement and enforce.

2. Purpose and use of the information collection.

The information collection requirements under Part 760 are recordkeeping and disclosure requirements imposed on federally insured credit unions. The information collection is required to evidence compliance with the requirements of Part 760 and the Federal flood insurance statutes with respect to lenders and servicers. The information collection requirements are triggered by specific events in the lending process. The records are maintained by credit unions and are not provided to the NCUA. In general, the Federal flood insurance statutes and Part 760 provide that a lender (credit union):

• Retain a completed copy of the Standard Flood Hazard Determination (SFHD) form developed by FEMA. The SFHD form is used by lenders to document their determination of whether a building or mobile home offered as collateral security for a loan is or will be located in a special flood hazard area that offers flood insurance;

• Notify a borrower and servicer when a building or mobile home offered as collateral security for a loan is determined to be in a special flood hazard area and notify them whether flood insurance is available;

• Notify the borrower and servicer if the secured property becomes newly located in a special flood hazard area due to remapping of flood hazard areas by FEMA, which would obligate the borrower to obtain flood insurance;

• Notify a borrower whose mandated flood insurance policy has expired or if the policy covers an amount less than the required amount, of the borrower’s obligation to obtain a flood insurance policy for the required amount. If the borrower fails to obtain a flood insurance policy for the required amount following this notification, the credit union or its servicer must purchase flood insurance on the borrower’s behalf and charge the borrower for the cost of the premiums and fees (force placement). The credit union or its servicer must force-place flood insurance on the borrower’s behalf if the borrower, after notification, fails to obtain mandated flood insurance due to remapping; and

• Notify FEMA of the identity of, and any change in, the servicer of a loan secured by a building or mobile home located or to be located in a special flood hazard area.

• Retain documentation of the credit union's conclusion that the private policy that does not meet the definition of "private flood insurance", or policy issued by a mutual aid society, that the credit union accepted provides sufficient protection of the designated loan, and it is consistent with general safety and soundness principles.

The notice to the borrower is used to assist the borrower in decision-making about purchasing flood insurance for the collateral used to secure the loan.

The borrower notice is provided to the loan servicer to inform the servicer of its responsibility to perform certain tasks for the lender, such as collecting flood insurance premiums. Part 760 requires the credit union to retain a record of the receipt of the borrower notice by the borrower and the servicer.

The credit union uses the force placement notice to inform the borrower of his or her obligation to purchase and maintain flood insurance for the term of the loan.

FEMA uses the servicer notice(s) to maintain current information on where to direct inquiries or send notices of flood insurance renewals.

The NCUA uses the completed copy of the SFHD form and receipts from the borrower and servicer to verify compliance.

The Biggert-Waters Act required escrow for all new and outstanding loans in a SFHA, unless certain exceptions applied. HFIAA added several new exceptions, and most notably, ties the escrow requirement to a tripwire event (the origination, refinance, increase, extension, or renewal of a loan on or after January 1, 2016). While a regulated lending institution is not required to escrow until a tripwire event occurs, such institution is still required to offer and make available the option to escrow for all outstanding designated loans.

The NCUA uses the credit union's documentation of the credit union's conclusion that the private policy it accepted does not meet the definition of "private flood insurance", or the private policy issues by a mutual aid society, provides sufficient protection of the designated loan and is consistent with general safety and soundness principles.

3. Use of information technology.

Credit unions may use any information technology available to provide any requirements of the regulation.

4. Duplication of information.

This information collection is unique to the credit union and to the loan. It is not duplicated anywhere.

5. Efforts to reduce burden on small entities.

The collection of information does not have a significant impact on a substantial number of small credit unions. Under Part 760, credit unions may use the SFHD form provided by FEMA to notify borrowers and provides model notices that satisfy the borrower notice requirements.

6. Consequences of not conducting the collection.

This information collection is conducted only for loans secured by buildings or mobile homes located in special flood hazard areas. Less frequent collection would substantially impair the effectiveness of the program. If the collection occurred less frequently, the NCUA would be unable to verify compliance.

The collection is only required when a loan is made, increased, extended, or renewed. It is at these times that the information regarding the status and obligations related to property located in a special flood area is most useful to both borrower and lender.

7. Inconsistent with guidelines in 5 CFR part 1320.5(d)(2).

There are no special circumstances. This information collection is conducted in accordance with the guidelines in 5 CFR 1320.5(d)(2).

8. Efforts to consult with persons outside the agency.

A 60-day notice was published in the Federal Register on March 6, 2024, at 89 FR 16035, soliciting comments from the public. No public comments were received in response to this notice.

9. Payment or gifts to respondents.

Not applicable; no payment or gift provided.

10. Assurance of confidentiality.

All required records will be kept private to extent permitted by law.

11. Questions of a sensitive nature.

No questions of a sensitive nature are involved. No personally identifiable information is collected.

12. Burden of information collection.

The reported number of FICUs that granted Non-Commercial Real Estate loans is 3,229. The annual burden is estimated to be 101,354 hours for 3,229 federal credit unions deemed to be respondents for purposes of PRA.

12 CFR	Information Collection	Type of Burden	#Respondents	Frequency	Total Responses	Hrs. per Response	Total Annual Burden
760.6(b)	Retention of FEMA Form	Recordkeeping	3,229	328	1,059,112	0.042	44,483
760.9	Notice of Special Flood Hazard to Borrowers and Services	Disclosure	3,229	66	213,114	0.083	17,688
760.1	Notice to FEMA of Servicer	Disclosure	3,229	66	213,114	0.083	17,688
	Notice to FEMA of Change of Servicer	Disclosure	3,229	33	106,557	0.083	8,844
760.7	Notice to Borrowers of Lapsed Mandated Flood Insurance	Disclosure	3,229	13	41,977	0.083	3,484
	Notice of Purchase of Force-Placed Flood Insurance	Disclosure	3,229	3	9,687	0.25	2,422
	Notice to Borrowers and Servicer of Newly Located Property	Disclosure	3,229	7	22,603	0.083	1,876
	Notice of Purchase of Force-Placed Flood Insurance for Borrowers from Remapping	Disclosure	3,229	3	9,687	0.25	2,422
760.5	Escrow Notice (One-Time)	Disclosure	7	0.33	2	40	80
	Escrow Notice (Ongoing)	Disclosure	3,229	1	3,229	0.083	268
760.3	Recordkeeping: Documenting conclusions about private flood insurance policies for properties in SFHAs	Recordkeeping	3,229	2.6	8,395	0.25	2,099
			3,229		1,687,477		101,354

13. Capital start-up or on-going operation and maintenance costs.

There are no capital start-up or maintenance costs.

14. Annualized costs to the Federal government.

Not applicable. This is a third-party disclosure requirement; the estimate cost to the NCUA is negligible.

15. Changes in burden.

The number of respondents decreased from 4,164 to 3,229. The number of respondents for the one-time escrow notice also decreased as this activity applies only to new credit unions granting real estate loans. These adjustments resulted in a decrease of 83,859 (185,213-101,354) in annual burden hours.

16. Information collection planned for statistical purposes.

This information is not planned for statistical purposes.

17. Request non-display the expiration date of the OMB control number.

The OMB control number and expiration date associated with this PRA submission will be displayed on the Federal government’s electronic PRA docket website at www.reginfo.gov.

18. Exceptions to the certification for Paperwork Reduction Act submission.

There are no exceptions to the certification statement.

B. COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS

This collection does not involve statistical methods.

1 Pub. L. 112-141, 126 Stat. 916 (2012).

2 Pub. L. 90-448, 82 Stat. 572 (1968).

3 Pub. L. 93–234, 87 Stat. 975 (1973).

4 These statutes are codified at 42 U.S.C. 4001-4129. The Federal Emergency Management Agency (FEMA) administers the NFIP; its regulations implementing the NFIP appear at 44 CFR parts 59-77.

5⁵ The FDPA defines “regulated lending institution” to mean any bank, savings and loan association, credit union, farm credit bank, Federal land bank association, production credit association, or similar institution subject to the supervision of a Federal entity for lending regulation. 42 U.S.C. 4003(a)(1).

6 An SFHA is an area within a flood plain having a one percent or greater chance of flood occurrence in any given year. 44 CFR 59.1. SFHAs are delineated on maps issued by the FEMA for individual communities. 44 CFR part 65. A community establishes its eligibility to participate in the NFIP by adopting and enforcing flood plain management measures that regulate new construction and by making substantial improvements within its SFHAs to eliminate or minimize future flood damage. 44 CFR part 60.

7 See 12 CFR part 22 (OCC), part 208 (Board), part 339 (FDIC), part 614 (FCA), and part 760 (NCUA).

OMB # 3133-0190; Final 5