12 CFR §339.3 — Loans in Areas Having Special Flood Hazards (FDIC)

flood-12cfr-339-3

12 CFR §339.3 is the FDIC's implementation of the §4012a mandatory-purchase rule for FDIC-supervised institutions.

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source:
  type: regulation
  id: flood-12cfr-339.3
  authority: 12 CFR §339.3 — Loans in Areas Having Special Flood Hazards (FDIC)
  description: |
    12 CFR §339.3 is the FDIC's implementation of the §4012a mandatory-purchase
    rule for FDIC-supervised institutions.
obligations:
  - id: flood-12cfr-339.3-a-purchase-requirement
    canonical_id: flood-12cfr-339.3-a-purchase-requirement
    section: '12 CFR §339.3(a) — In general: requirement to purchase flood insurance'
    description: |
      [LENDER], as an FDIC-supervised institution, shall not make, increase,
      extend, or renew any designated loan unless the building or mobile home
      and any personal property securing the loan is covered by flood
      insurance for the term of the loan. The amount of insurance must be at
      least equal to the lesser of the outstanding principal balance of the
      designated loan or the maximum limit of coverage available for the
      particular type of property under the Act. Flood insurance coverage
      under the Act is limited to the building or mobile home and any
      personal property that secures a loan and not the land itself.
    type: dont
    audit_question: For every designated loan [LENDER] makes, increases, extends, or renews, can [LENDER] evidence flood insurance coverage for the term of the loan in an amount at least equal to the lesser of outstanding principal balance or the NFIP maximum limit?
    program_review: Do the P&Ps ensure no designated loan is made, increased, extended, or renewed unless the building/mobile home and securing personal property carry flood insurance for the loan term in an amount at least the lesser of outstanding principal balance or the NFIP maximum limit for the property type?
    file_review: On the designated-loan population, pull the flood policy and coverage-amount worksheet; confirm term coverage and the lesser-of amount. Objective threshold/presence check.
    judgment: false
    feeds: []
    workflow_phase: origination
    owner_role: compliance_officer
    secondary_owner_role: default_servicing_analyst
    cadence: per-loan-event
    consequence: Civil monetary penalty under §4012a(f); FDIC supervisory action; loan ineligibility for federal program backing.
    tags:
      - round-b
      - regulator-direct
      - flood
      - mandatory-purchase
      - fdic
      - promoted
    primary_source:
      tier: 1
      authority: 12 CFR §339.3(a)
      source_class: flood-regulation
      source_url: https://www.law.cornell.edu/cfr/text/12/339.3
      snapshot_id: efd9bcb37b5af1f9
      fetched_at: '2026-05-22T18:52:41Z'
      content_hash: sha256:72c331360b267129f3f241f9280427a4c653f739b884982d3cbe0e0aa4127169
      paragraph_quote: (a) In general. An FDIC-supervised institution shall not make, increase, extend, or renew any designated loan unless the building or mobile home and any personal property securing the loan is covered by flood insurance for the term of the loan. The amount of insurance must be at least equal to the lesser of the outstanding principal balance of the designated loan or the maximum limit of coverage available for the particular type of property under the Act . Flood insurance coverage under the Act is limited to the building or mobile home and any personal property that secures a loan and not the land itself.
      drafter_attestation: |
        Copied verbatim from snapshot efd9bcb37b5af1f9 (content.txt) at
        2026-05-22T19:15Z. Substring is the §339.3(a) purchase requirement
        in its entirety.
    promoted_at: '2026-05-22T19:04:39+00:00'
    promoted_from: flood-12cfr-339.3-roundb-v1.yaml
  - id: flood-12cfr-339.3-b-table-funded-loans
    canonical_id: flood-12cfr-339.3-b-table-funded-loans
    section: 12 CFR §339.3(b) — Table funded loans
    description: |
      If [LENDER] (FDIC-supervised institution) acquires a loan from a
      mortgage broker or other entity through table funding, [LENDER] is
      considered to be making a loan for purposes of Part 339 and is
      therefore subject to the §339.3(a) purchase requirement.
    type: do
    audit_question: For every table-funded loan [LENDER] acquires from a mortgage broker or other entity, can [LENDER] evidence that the §339.3(a) flood-purchase requirement was applied as if [LENDER] originated the loan directly?
    program_review: Does the program account for the table-funding rule — applying the §339.3(a) flood-purchase requirement to loans acquired from a broker/other entity through table funding as if [LENDER] originated them directly?
    file_review: Spot-check table-funded acquisitions to confirm the §339.3(a) determination and coverage were in place as for direct originations.
    judgment: false
    feeds: []
    workflow_phase: origination
    owner_role: compliance_officer
    secondary_owner_role: default_servicing_analyst
    cadence: per-loan-event
    consequence: Civil monetary penalty under §4012a(f); FDIC supervisory finding for missing table-funded-loan flood controls.
    tags:
      - round-b
      - regulator-direct
      - flood
      - table-funded
      - fdic
      - promoted
    primary_source:
      tier: 1
      authority: 12 CFR §339.3(b)
      source_class: flood-regulation
      source_url: https://www.law.cornell.edu/cfr/text/12/339.3
      snapshot_id: efd9bcb37b5af1f9
      fetched_at: '2026-05-22T18:52:41Z'
      content_hash: sha256:72c331360b267129f3f241f9280427a4c653f739b884982d3cbe0e0aa4127169
      paragraph_quote: (b) Table funded loans. An FDIC-supervised institution that acquires a loan from a mortgage broker or other entity through table funding shall be considered to be making a loan for the purpose of this part.
      drafter_attestation: |
        Copied verbatim from snapshot efd9bcb37b5af1f9 (content.txt) at
        2026-05-22T19:15Z. Substring is the §339.3(b) table-funded-loan
        paragraph in its entirety.
    promoted_at: '2026-05-22T19:04:39+00:00'
    promoted_from: flood-12cfr-339.3-roundb-v1.yaml
  - id: flood-12cfr-339.3-c1-mandatory-acceptance-private-flood
    canonical_id: flood-12cfr-339.3-c1-mandatory-acceptance-private-flood
    section: 12 CFR §339.3(c)(1) — Mandatory acceptance of private flood insurance
    description: |
      [LENDER] (FDIC-supervised institution) must accept private flood
      insurance, as defined in §339.2, in satisfaction of the §339.3(a)
      flood insurance purchase requirement if the policy meets the §339.3(a)
      coverage requirements. The §339.3(c)(2) "compliance aid" allows
      [LENDER] to determine that a policy meets the §339.2 definition
      (without further review) if a specified statutory-cite endorsement is
      included in the policy.
    type: do
    audit_question: For every loan where the borrower presents a private flood insurance policy meeting §339.2, can [LENDER] evidence acceptance of that policy in satisfaction of the §339.3(a) purchase requirement, with documented review (or §339.3(c)(2) compliance-aid endorsement)?
    program_review: Does the program account for the mandatory-acceptance rule — accepting a private flood policy meeting §339.2 in satisfaction of §339.3(a), either via documented review or the §339.3(c)(2) compliance-aid endorsement?
    file_review: Spot-check files where a private flood policy was presented; confirm acceptance with documented §339.2 review or the compliance-aid endorsement. The compliance person judges whether a policy lacking the endorsement actually met §339.2.
    judgment: true
    feeds: []
    workflow_phase: origination
    owner_role: compliance_officer
    secondary_owner_role: default_servicing_analyst
    cadence: per-loan-event
    consequence: Civil monetary penalty under §4012a(f); UDAAP exposure for wrongful rejection of compliant private flood policies.
    tags:
      - round-b
      - regulator-direct
      - flood
      - private-flood-insurance
      - fdic
      - promoted
    primary_source:
      tier: 1
      authority: 12 CFR §339.3(c)(1)
      source_class: flood-regulation
      source_url: https://www.law.cornell.edu/cfr/text/12/339.3
      snapshot_id: efd9bcb37b5af1f9
      fetched_at: '2026-05-22T18:52:41Z'
      content_hash: sha256:72c331360b267129f3f241f9280427a4c653f739b884982d3cbe0e0aa4127169
      paragraph_quote: (c) Private flood insurance —(1) Mandatory acceptance. An FDIC-supervised institution must accept private flood insurance , as defined in § 339.2 , in satisfaction of the flood insurance purchase requirement in paragraph (a) of this section if the policy meets the requirements for coverage in paragraph (a) of this section.
      drafter_attestation: |
        Copied verbatim from snapshot efd9bcb37b5af1f9 (content.txt) at
        2026-05-22T19:15Z. Substring is the §339.3(c)(1) mandatory-
        acceptance paragraph in its entirety.
    promoted_at: '2026-05-22T19:04:39+00:00'
    promoted_from: flood-12cfr-339.3-roundb-v1.yaml
_promotion_history:
  - promoted_at: '2026-05-22T19:04:39+00:00'
    candidate_path: obligations\_remediation\_round_b_drafts\flood-12cfr-339.3-roundb-v1.yaml
    candidates_promoted: 3
    candidates_skipped_existing: 0

Verbatim regulatory text (3)

Verbatim provisions from 12 CFR §339.3 — Loans in Areas Having Special Flood Hazards (FDIC) — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.

12 CFR §339.3(a) — In general: requirement to purchase flood insurance

(a) In general. An FDIC-supervised institution shall not make, increase, extend, or renew any designated loan unless the building or mobile home and any personal property securing the loan is covered by flood insurance for the term of the loan. The amount of insurance must be at least equal to the lesser of the outstanding principal balance of the designated loan or the maximum limit of coverage available for the particular type of property under the Act . Flood insurance coverage under the Act is limited to the building or mobile home and any personal property that secures a loan and not the land itself.

Source: 12 CFR §339.3(a) · source URL · snapshot efd9bcb37b5af1f9

12 CFR §339.3(b) — Table funded loans

(b) Table funded loans. An FDIC-supervised institution that acquires a loan from a mortgage broker or other entity through table funding shall be considered to be making a loan for the purpose of this part.

Source: 12 CFR §339.3(b) · source URL · snapshot efd9bcb37b5af1f9

12 CFR §339.3(c)(1) — Mandatory acceptance of private flood insurance

(c) Private flood insurance —(1) Mandatory acceptance. An FDIC-supervised institution must accept private flood insurance , as defined in § 339.2 , in satisfaction of the flood insurance purchase requirement in paragraph (a) of this section if the policy meets the requirements for coverage in paragraph (a) of this section.

Source: 12 CFR §339.3(c)(1) · source URL · snapshot efd9bcb37b5af1f9