skip to main content
This is the start of the main content


FHA Acceptance of Private Flood Insurance for FHA-Insured Mortgages

The Federal Housing Administration (FHA) recently published the Acceptance of Private Flood Insurance for FHA-Insured Mortgages final rule in the Federal Register: Acceptance of Private Flood Insurance for FHA-Insured Mortgages.

According to this publication, FHA will now accept private flood insurance policies where the borrower chooses to obtain a comparable private policy instead of flood insurance available through the National Flood Insurance Program (NFIP). This change applies to all FHA-insured Single Family Title II mortgages, including Home Equity Conversion Mortgages (HECM), and loans insured under FHA’s Title I programs.

FHA also published Mortgagee Letter (ML) 2022-18, which provides guidance necessary to implement the provisions in the final rule.

The guidance in the ML is effective December 21, 2022.

Updates in the ML will be incorporated in a future version of Single Family Housing Policy Handbook 4000.1: SFH Handbook 4000.1 | / U.S. Department of Housing and Urban Development (HUD)

Technology Updates

FHA will now begin collecting additional detailed flood insurance information from lenders. The additional data will enable FHA to perform more robust data analytics on FHA-insured properties in flood zones and the types of flood insurance policies on properties with FHA-insured mortgages. As noted in the ML, mortgagees must now report the following additional required flood insurance information in the insurance application screen in FHA Connections (FHAC):

  • Indicate NFIP, private flood insurance, both, or no flood insurance; and
  • Provide flood insurance policy information for each type of policy as applicable, including building coverage amount, policy number, and insurance company name.

Proctor Loan Protector is closely reviewing the final rule and ML to determine their potential impact on clients’ business rules. In the meantime, if you have any questions, please contact your client relationship manager.

The Proctor Loan Protector Compliance Team will continue to monitor this topic and provide updates as they develop.