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Federal agency recommends FEMA review mandatory for flood insurance requirements

The US Government Accountability Office (GAO) – an impartial government audit mechanism – has released a new report, which proposes that the Federal Emergency Management Agency (FEMA) reconsider the mandatory purchase requirements of the National Flood Insurance Program (NFIP).

The NFIP compels homeowners with federally governed mortgages to buy flood insurance for properties that are placed in areas of high flood risk. However, GAO remarked in its report that some of FEMA’s floodplain maps are outdated. The agency also mentioned that FEMA’s floodplain maps also “do not reflect how climate change may affect flood risk.”

GAO also asserted that under FEMA’s mandatory investment requirement, homebuyers and owners cannot take loans out for their high flood threat properties unless their lenders can ascertain that they have flood insurance; at least 10 federal beings oversee lender obedience. It was reported that regulators have often specified violations related to a lack of or insufficient flood insurance scope for properties subject to the requirement. Once these infringements are identified, lenders are expected to take “corrective actions,” and may have to assess monetary liabilities on repeat offenders.

However, FEMA does not effectively use this obedience information to address the issue of noncompliance, GAO found.

“Information currently conserved by FEMA and other national entities could help inform FEMA on disobedience trends and patterns and help FEMA to develop policies to address them,” the agency said in its report. “By using inner and external information to adequately understand submission with the requirement, and facilitating the sharing of this data among the federal beings with responsibilities related to the requirement, FEMA may help lessen instances of noncompliance, increase consumer participation, and limit the federal government’s fiscal susceptibility to future flood losses.”

“Congress should consider requiring FEMA to analyze how updated flood risk information could be used to deduce which properties must have insurance,” GAO ultimately recommended in its report.

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