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I recently obtained a loan for $10,000 and made several home improvements. The lender decided to take a security interest in my home, but only as a precaution. My home is in a Special Flood Hazard Area (SFHA). Will I be required to have flood insurance?

Yes. If the lender takes a security interest in a building or mobile home in an SFHA in which flood insurance is available under the National Flood Insurance Act (NFIA), then flood insurance is required. The NFIA makes no exception for property taken as collateral by a lender out of an abundance of caution.

Refer to 42 USC 50 "National Flood Insurance Act."

Last Reviewed: April 2021

Please note: The terms "bank" and "banks" used in these answers generally refer to national banks, federal savings associations, and federal branches or agencies of foreign banking organizations that are regulated by the Office of the Comptroller of the Currency (OCC). Find out if the OCC regulates your bank. Information provided on should not be construed as legal advice or a legal opinion of the OCC.

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