WASHINGTON (4/1/10)--Following the March 28 expiration of the National Flood Insurance Program (NFIP), the Federal Emergency Management Agency (FEMA) has no authority to issue new flood insurance policies, issue increased coverage on existing policies, or issue renewal policies until the program has been reauthorized by Congress. The Federal Reserve (Fed) this week issued informal guidance to help institutions address certain issues that may arise during the lapse period, and that guidance will apply to this current lapse period and any future lapses of the NFIP. While the Fed guidance applies to its member banks at this time, the National Credit Union Administration may issue guidance soon on how the lapse affects compliance with Section 760 of its own regulations. According to the Fed’s guidance, lenders may continue to make loans that would normally be subject to the flood insurance provisions during an NFIP lapse period. However, lenders are expected to make flood determinations, provide timely and accurate notice to borrowers regarding flood insurance requirements and comply with other parts of the flood insurance regulations. Additionally, lenders are expected to evaluate safety and soundness and legal risks and to manage those risks during the lapse period. Finally, lenders are expected to put procedures in place to ensure that policies are expeditiously obtained after reauthorization for properties that are required to have flood insurance coverage. For the Fed's guidance, use the resource link.