Flood Insurance
Extent of Noncompliance with Purchase Requirements Is Unknown Gao ID: GAO-02-396 June 21, 2002The Federal Emergency Management Agency (FEMA) run National Flood Insurance Program (NFIP) has combined flood hazard mitigation efforts and insurance to protect homeowners against losses from floods. The program provides an incentive for communities to adopt floodplain management ordinances to mitigate the effect of flooding upon new or existing structures. Virtually all communities in the country with flood-prone areas now participate in the NFIP, and over four million U.S. households have flood insurance. Nevertheless, the President's proposed budget for 2003 characterizes the NFIP as "moderately effective," because many at-risk properties remain uninsured. The proposed budget establishes a goal to increase flood insurance policies in force by five percent in 2003 and would increase funding for flood zone mapping activities to better identify at-risk properties. Although the assessment and goal described in the proposed budget apply to the entire NFIP, the success of a particular component of the program--the mandatory purchase requirement--has been the subject of debate for many years. The federal bank regulators overseeing lending institutions that hold or service mortgages on properties that must have flood insurance believe that there is a high level of compliance. However, others have questioned whether the requirements are being met. The different types of evidence collected by bank regulators and government-sponsored enterprises on the one hand, and FEMA on the other, are the bases for their opposing perspectives on lender noncompliance with flood insurance purchase requirements. Federal organizations overseeing lenders use bank examinations and loan portfolio reviews to examine a nonstatistical sample of loans for compliance. These organizations uncovered few significant violations, leading them to believe that lenders are complying with flood insurance purchase requirements. In contrast, FEMA relies on its own noncompliance estimates from data it generates itself, from other entities, limited studies it conducted, and anecdotal evidence from public officials and others with knowledge of the program to gauge noncompliance. These data indicate that lenders are not adequately complying with the requirements. GAO's analysis of readily available data does not suggest a major noncompliance problem at loan origination in highly flood-prone areas. Property-specific data on mortgages, flood zone determinations, and flood insurance policies--compiled at loan origination and at various points during the life of the loan--would be needed to fully measure compliance. These data are needed to ensure that homeowners purchase, maintain, and do not terminate required flood insurance.
GAO-02-396, Flood Insurance: Extent of Noncompliance with Purchase Requirements Is Unknown
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United States General Accounting Office:
GAO: Report to Congressional Committees:
June 2002:
Flood insurance:
Extent of Noncompliance with Purchase Requirements Is Unknown:
Extent of Noncompliance with Purchase RequirementsExtent of
Noncompliace with Purchase Requirements Is Unknown:
GAO-02-396:
Contents:
Abbreviations:
FDICFederal Deposit Insurance Corporation FEMAFederal Emergency
Management Agency FRBFederal Reserve Board GSEgovernment-sponsored
enterprises HMDAHome Mortgage Disclosure Act HUDDepartment of Housing
and Urban Development IGOffice of the Inspector General MSAmetropolitan
statistical area NFIPNational Flood Insurance Program OCCOffice of the
Comptroller of the Currency OFHEOOffice of Federal Housing Enterprise
Oversight OTSOffice of Thrift Supervision SFHAspecial flood hazard area
SFHDFstandard flood hazard determination form VADepartment of Veterans
Affairs:
United States General Accounting Office:
Washington, DC 20548:
June 21, 2002:
The Honorable Barbara A. Mikulski Chairman The Honorable Christopher S.
Bond Ranking Member Subcommittee on VA, HUD, and Independent Agencies
Committee on Appropriations United States Senate:
The Honorable Paul S. Sarbanes Chairman The Honorable Phil Gramm
Ranking Member Committee on Banking, Housing, and Urban Affairs United
States Senate:
The Honorable Charles E. Schumer Chairman The Honorable Jim Bunning
Ranking Member Subcommittee on Economic Policy Committee on Banking,
Housing, and Urban Affairs United States Senate:
Floods have inflicted more economic losses upon the United States than
any other natural disaster. Since its inception 34 years ago, the
National Flood Insurance Program (NFIP) has combined flood hazard
mitigation efforts and insurance to protect homeowners against losses
from floods. The program, which is administered by the Federal
Emergency Management Agency (FEMA), provides an incentive for
communities to adopt floodplain management ordinances to mitigate the
effects of flooding upon new or existing structures. It offers property
owners in participating communities a mechanism--federal flood
insurance--to cover flood losses without increasing the burden on the
federal government to provide disaster relief payments. Virtually all
communities in the country with flood-prone areas now participate in
the NFIP, and over 4 million U.S. households have flood insurance.
Nevertheless, the President‘s proposed budget for 2003 characterizes
the NFIP as ’moderately effective,“ because many at-risk properties
remain uninsured. The proposed budget establishes a goal to increase
the number of flood insurance policies in force by 5 percent in 2003
and would increase funding for flood zone mapping activities to better
identify at-risk properties.
While the assessment and goal described in the proposed budget apply to
the entire NFIP, the success of a particular component of the program-
-the mandatory purchase requirement--has been the subject of debate for
many years. Since 1973, flood insurance has been required for
properties located in flood-prone areas of participating communities
for the life of mortgage loans made or held by federally regulated
lending institutions [Footnote 1] or guaranteed by federal agencies.
Mortgages purchased by government- sponsored enterprises (GSE) were
also included under the National Flood Insurance Reform Act of 1994.
[Footnote 2] In 1990, we reported that differing viewpoints had emerged
about whether all homeowners required to obtain flood insurance
actually had it; [Footnote 3] these differences of opinion still
remain. Lending institutions and companies that hold or service
mortgages on properties that must have flood insurance are responsible
for ensuring that this insurance is purchased when the mortgage is
originated and maintained over the life of the loan. The federal bank
regulators overseeing these lending institutions believe that there is
a generally high level of compliance with the flood insurance purchase
requirements. Reports issued by FEMA‘s Office of Inspector General (IG)
and others, however, have questioned whether the requirements are being
met, and FEMA therefore has stated that noncompliance rates might be
significant. Still, no definitive analysis has been conducted that
measures the extent to which property owners who are required to
purchase flood insurance actually do so.
Concerned about whether lender noncompliance could be high, the
Subcommittee on VA, HUD, and Independent Agencies, Senate Committee on
Appropriations, mandated that we examine lender compliance with the
mandatory insurance purchase requirement. Additionally, the Senate
Committee on Banking, Housing, and Urban Affairs and its Subcommittee
on Economic Policy asked us to review this issue. As agreed with your
offices, this report addresses the following questions:
1. What are the bases for the differing perspectives on lender
noncompliance?
2. What does other readily available data indicate about the extent of
noncompliance?
3. What data would be needed to fully measure noncompliance?
To address these objectives, we spoke with and obtained information
from FEMA, federal regulators of lending institutions, GSEs, flood zone
determination companies, mortgage companies, and others to obtain
perspectives and to collect readily available data on lender
noncompliance. We also obtained and analyzed home mortgage origination
data and flood insurance policy data for certain flood-prone areas to
obtain an independent perspective on the extent of noncompliance at the
time mortgages are made. However, this analysis could not match
specific mortgages with insurance policies to determine a compliance
level. Moreover, data were not available to determine whether insurance
was in force at loan origination for all geographic areas or during the
life of the mortgage loan; therefore, we could not analyze all aspects
of noncompliance with the mandatory purchase requirements. This report
focuses on the activities of the following regulatory agencies that
have regulatory authority over most of the pertinent mortgage market:
the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve
Board (FRB), the Office of the Comptroller of the Currency (OCC), and
the Office of Thrift Supervision (OTS). We also focused on the two GSEs
that have direct responsibility for compliance--the Federal National
Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage
Corporation (Freddie Mac). Our work focused only on compliance with
mandatory flood insurance purchase requirements for residential
properties. No analysis is provided in this report about participation
rates in the NFIP, a measure that encompasses homeowners in flood-prone
areas who are not required to obtain flood insurance. We testified
about participation rates in May 2001. [Footnote 4] See appendix I for
more details on our scope and methodology.
We conducted our review from April 2001 through April 2002 in
accordance with generally accepted government auditing standards.
Results in Brief:
The different types of evidence collected by bank regulators and GSEs
on the one hand, and FEMA on the other, are the bases for their
opposing perspectives on lender noncompliance with flood insurance
purchase requirements. Federal organizations responsible for
overseeing lenders use bank examinations and loan portfolio reviews to
examine a nonstatistical sample of loans for compliance. These
organizations have uncovered few significant violations, leading them
to believe that lenders are complying with flood insurance purchase
requirements. In contrast, FEMA relies on its own noncompliance
estimates that are based on data generated itself and other entities,
limited studies it conducted, and anecdotal evidence from public
officials and others with knowledge of the program to gauge
noncompliance. These data have indicated to FEMA officials that lenders
are not adequately complying with the requirements.
Our analysis of readily available data does not suggest a major
noncompliance problem at loan origination in the highly flood-prone
areas we reviewed. We obtained and analyzed readily available 1999 data
on the number of new mortgages reported by lenders and new flood
insurance policies as reported by FEMA for the nation‘s most flood-
prone areas. Our comparison of the number of new mortgages and policies
for 471 highly flood-prone areas in 17 states does not suggest that
noncompliance was a major problem in these areas because, for most of
the areas, more insurance policies were purchased than mortgages
originated. In 44 locations--9 percent of the areas we analyzed--the
data suggest there could be some noncompliance because, in those areas,
fewer insurance policies were purchased than mortgages originated.
However, explanations exist that may account for these areas having
fewer new policies than mortgages, such as mortgages originated for
condominiums, which have different flood insurance purchase
requirements.
Property-specific data on mortgages, flood zone determinations, and
flood insurance policies--compiled at loan origination and at various
points during the life of the loan--would be needed to fully measure
compliance. These data are needed to ensure that homeowners purchase,
maintain, and do not terminate flood insurance when it is required.
Comparing these data would allow the computation of compliance rates
nationally, regionally, or locally and would--with an additional piece
of data, the mortgage lender identification numbers--identify specific
noncomplying lenders. However, there are a number of challenges to
obtaining and analyzing these data. These challenges include
establishing reporting requirements on lenders to provide relevant
mortgage data, determining an appropriate authority to receive and
compare these data, and determining the costs and benefits of obtaining
these data. The regulators and GSEs, on the one hand, and FEMA, on the
other, have differing viewpoints of the viability of and the need for
obtaining these data.
We provided a draft of this report to FEMA, federal bank regulatory
agencies--FDIC, FRB, OCC, and OTS--and GSEs--Fannie Mae and Freddie
Mac--that are responsible for the issues discussed in this report. All
of these organizations generally agreed that the report (1) presents an
accurate and objective presentation of the differing perspectives on
noncompliance with the mandatory purchase requirements and (2) narrows
the concerns over noncompliance to the area of policy renewals and
retention. FEMA also provided additional information regarding its
belief that problems exist with insurance policy retention and its
plans to address this concern. Additionally, several organizations
provided technical comments that we considered and incorporated in the
report where appropriate.
Background:
Created by the National Flood Insurance Act of 1968, [Footnote 5] the
NFIP is designed to protect homeowners from flood losses while also
minimizing the exposure of property to flood damage. To participate in
the program, communities must adopt and enforce floodplain management
ordinances to mitigate the effects of flooding on new or existing homes
in special flood hazard areas (SFHA). Flood insurance is available in
communities participating in the NFIP and is offered to eligible
homeowners for homes and their contents. FEMA, through its Federal
Insurance and Mitigation Administration, manages the federal flood
insurance program and floodplain mitigation programs.
When the program was created, the purchase of flood insurance was
voluntary. To increase the impact of the program, however, the Congress
amended it in 1973 and in 1994 to require the purchase of flood
insurance by many homeowners and to place the onus for ensuring
compliance upon lending institutions. Currently, homeowners in SFHAs in
participating communities must purchase flood insurance as a condition
of obtaining mortgages on their homes if the loans are:
* made, increased, extended, or renewed by federally regulated lending
institutions;
* sold to Fannie Mae or Freddie Mac; [Footnote 6] or:
* made, insured, or guaranteed by a federal agency, such as the Small
Business Administration, Federal Housing Administration, or the
Department of Veterans Affairs. [Footnote 7]
No definitive data on the number of mortgages meeting these criteria
exist; however, on the basis of 1999 data reported by lenders, most
mortgaged properties meet the above criteria and, if in a SFHA, would
be subject to the requirements of the National Flood Insurance Act.
Federally regulated lending institutions--which make most of the
mortgages in the United States--and loan servicers [Footnote 8] must
ensure that, where required, flood insurance is purchased at the time
that the mortgage is obtained and maintained throughout the life of the
loan, or added if the residence involved is reclassified as being
located in a SFHA. They may not make, increase, extend, or renew a loan
secured by a structure located in a SFHA in a participating community
unless the structure is covered by flood insurance. Lenders generally
purchase flood zone determinations from flood zone determination
companies that use FEMA flood maps and other data to ascertain if
properties are situated in flood zones. The companies record the
results of their determinations on a standard flood hazard
determination form (SFHDF) and provide this form to lenders, who are
required to maintain it. Figure 1 shows the process that lenders
generally follow for obtaining and recording flood zone determinations
as part of their mortgage approval process.
Figure 1: Flood Zone Determination Portion of the Lender Mortgage
Approval Process:
Legend:
SFHDF standard flood hazard determination form:
Source: GAO analysis of information provided by FEMA, federal
regulatory, insurance, and mortgage loan-servicing officials.
If a lender or servicer determines at any time during the life of the
mortgage that a property is located in a SFHA--even if a flood zone
remapping places it in a SFHA after the mortgage was first originated-
-the lender or servicer must ensure the purchase of the appropriate
flood insurance.
The federal agencies that regulate lending institutions and the GSEs
were also given certain compliance responsibilities. As required by the
1994 amendments to the National Flood Insurance Act, the regulatory
agencies established rules directing lending institutions not to make
loans secured by improved real estate located in SFHAs unless flood
insurance had been purchased. The regulatory agencies are to examine
loans for compliance with these regulations during their periodic
examinations of member financial institutions, using uniform policies
and procedures for assessing lender compliance with flood insurance
requirements. The GSEs were required to implement procedures reasonably
designed to ensure that flood insurance coverage exists for any
purchased loan that is secured by improved real estate located in a
SFHA. The GSEs have established flood insurance purchase requirements
to be followed by institutions that sell mortgages to them or service
mortgages for them and have procedures in place to assess loans for
compliance. Appendix II contains additional information on bank
examination procedures and processes, and appendix III contains
additional information on the review and audit procedures followed by
GSEs.
Noncompliance Debate Is Based on Differing Types of Data:
Officials involved with the flood insurance program developed
contrasting viewpoints about whether lenders are complying with flood
insurance purchase requirements primarily because the officials use
differing types of data to reach their conclusions. Federal bank
regulators and officials from Fannie Mae and Freddie Mac base their
belief that lenders are generally complying with the NFIP‘s purchase
requirements on regulators‘ examinations and GSEs‘ reviews conducted to
monitor and verify lender compliance. In contrast, FEMA officials
believe that many lenders frequently are not complying with the
requirements, which is an opinion based largely on noncompliance
estimates computed from data on mortgages, flood zones, and insurance
policies; limited studies on compliance; and anecdotal evidence
indicating that insurance is not in place where required. Neither side,
however, is able to substantiate its differing claims with
statistically sound data that provide a nationwide perspective on
lender noncompliance.
Bank Exams and Compliance Reviews Are Bases for Regulators and GSEs‘
Views on Noncompliance:
On the basis of their bank exams and compliance reviews, bank
regulators and GSE officials believe that the rates of noncompliance
with flood insurance purchase requirements are very low. According to
representatives of the regulatory agencies, very few violations of
flood insurance requirements have occurred. Moreover, according to the
bank regulators‘ 1994-2000 annual reports to the Congress, most of the
violations found during examinations have been of a technical nature,
such as improperly completing necessary forms or not giving borrowers
timely notification that the property is in a flood zone before the
loan closing date. More serious violations, such as failure to confirm
that insurance is in place when required, or failure to obtain a flood
zone determination for a property, have been infrequently detected
during examinations. For example, since 1996, the bank regulators have
levied 51 civil monetary penalties on lending institutions that
committed serious violations of flood insurance requirements. Fannie
Mae and Freddie Mac may force lenders who sell loans to repurchase a
loan if their requirements for flood insurance are not met. Both
enterprises told us that this action has rarely occurred because
instances of noncompliance are almost always corrected by the lenders.
Similarly, the bank regulators‘ examiners and managers responsible for
conducting bank examinations that we talked to said lending
institutions are doing a good job of complying with flood insurance
requirements. In general, the examination process involves field
examiners assessing a lending institution‘s procedures for ensuring
compliance with the flood insurance requirements and checking a sample
of loan files to verify that the procedures are routinely followed.
According to the examiners, lending institutions are familiar with the
stipulations of various consumer compliance laws and fulfilling the
requirements for flood insurance has become a standard procedure in
mortgage lending. Bank regulatory and industry officials have stated
that completing standard flood hazard determination forms and ensuring
that borrowers obtain flood insurance for properties where it is
required are standard business practices for lenders. They added that
at larger lending institutions, automated systems typically track
borrowers‘ flood insurance policies throughout the life of a loan.
Nevertheless, the regulatory agencies and GSEs acknowledge that
complete data on compliance do not exist and the data they obtain from
bank examinations are not statistically representative of compliance
either for the bank or the country. Regulators and GSEs do not use a
statistical sample of loans when examining for flood insurance
compliance. Their findings at a lending institution, or even from all
of the lending institutions that they regulate, therefore, cannot be
generalized to the industry. Examining for compliance with flood
insurance purchase requirements is but one of approximately 20
different laws and regulations--such as those relating to equal
opportunity lending, truth-in-lending, and debt collection practices--
included in compliance examinations. Staff of one regulatory agency
told us that obtaining a statistically valid sample for any of these
issues would require examination of many more loans than currently
inspected and would seriously threaten their ability to examine bank
compliance with other requirements. They do not believe it would be
prudent or cost-effective to review a statistically valid sample of
loans for compliance with NFIP regulations without stronger evidence of
widespread noncompliance.
Estimates, Studies, and Contacts with Local Officials Are Bases for
FEMA Views on Noncompliance:
FEMA officials disagree with bank regulators and GSEs about the level
of overall lender compliance with flood insurance requirements.
Although FEMA officials believe that lenders have been doing a better
job of ensuring the purchase of flood insurance in recent years, they
also believe that noncompliance rates are still significant. FEMA
officials base their opinion on three factors: (1) their estimate of
the aggregate number of homeowners who live in flood zones, have
federally backed mortgages and, therefore, are required to have flood
insurance compared with the number of flood insurance policies in
force; (2) a small number of relevant, but limited, studies; and (3)
anecdotal information obtained from conversations with local government
officials and others knowledgeable about the flood insurance program.
FEMA does not have information on the individual properties that should
be covered by flood insurance, but it has estimated the number of
properties that should be insured. Using that estimate, it developed an
overall estimate of noncompliance indicating that many properties do
not have the required insurance. According to FEMA‘s estimate, in
fiscal year 2000 nearly one out of three homes required to have flood
insurance did not have it. On the basis of Mortgage Bankers Association
data on homes and mortgages, U.S. Corps of Engineers data on the
percentage of structures located in SFHAs, and its own insurance policy
data, FEMA estimates that less than 2.9 million flood insurance
policies have been issued for over 4.3 million mortgaged properties in
SFHAs. According to this estimate, nearly 1.4 million--32 percent--may
not have flood insurance. FEMA officials acknowledge that an accurate
rate of noncompliance will not be known until mortgage data are linked
to flood insurance policy data. They nevertheless believe that the
estimate indicates a potentially significant noncompliance problem.
FEMA officials point out that two studies the agency conducted also
indicate noncompliance with the mandatory purchase requirement. A 1999
study conducted by a FEMA regional office and a 2000 study by the FEMA
IG assessed specific areas to determine the number of homes that had
flood insurance. [Footnote 9] The two studies examined different
localities, but each found a portion of sampled properties--as high as
45 percent in the regional office study--that did not have the required
insurance, as discussed below.
* A post-disaster compliance study issued in April 1999 by one of
FEMA‘s regional offices assessed rates of noncompliance after a 1998
flood in Vermont. The study examined 120 properties located in a SFHA
and found that 54--or 45 percent--had mortgages from a federally
regulated institution and should have had insurance but did not.
Moreover, the study found that the federal government provided $500,000
in disaster assistance to these properties--assistance funds that would
not have been paid had these properties been insured.
* An August 2000 IG study examined the rate of noncompliance for 4,195
residences located in SFHAs in 10 states. The study found that for
these residences, about 416--or 10 percent--were required to have flood
insurance but did not. For example, a North Carolina subdivision that
had been built in a SFHA in 1996 contained 27 uninsured homes of which
20 had a mortgage from a federally regulated lending institution. The
study also noted that statistics for that state showed that of about
150,000 structures located in SFHAs, only 33 percent were covered by
flood insurance.
In addition to these analyses, FEMA officials cite the results of
studies conducted by private companies after presidentially declared
disasters in North Dakota and Kentucky that found that from 28 to 38
percent of the properties sampled did not have flood insurance.
[Footnote 10]0 While neither of these studies took into consideration
whether the homeowners without flood insurance had mortgages from
regulated lenders, FEMA officials believe that it is reasonable to
assume that this indicates a potential problem with compliance since a
large percentage of the homes in this country have mortgages from
regulated lenders.
Finally, FEMA officials stated that their concerns about lender
compliance are bolstered by anecdotal evidence they have obtained
during FEMA- sponsored workshops and field visits and from insurance
and flood zone determination industry officials. For example, during a
NFIP lender- training workshop that we observed, bank employees
discussed with FEMA officials examples of noncompliance that were known
but not corrected. The bank employees said that they have observed
instances in which other bank officials discovered that a home required
flood insurance when its owner sought to refinance the mortgage it had
with the bank. When the owner decided not to refinance, the bank
officials did not require the purchase of the flood insurance to
protect the existing loan, even though the law mandates such purchase.
Similarly, when providing assistance in presidentially declared
disaster areas, FEMA officials have heard accounts of flood victims who
should have been required by their lender to have flood insurance but
were not told that they needed it. Moreover, representatives of the
insurance and determination industries told us they consistently
informed FEMA that they believe the extent of noncompliance is a
problem.
FEMA officials acknowledge that their opinions on compliance are based
on limited data. Nevertheless, they believe that the preponderance of
information available to them indicates that lenders are not fully
ensuring compliance with flood insurance purchase requirements.
GAO Analysis of Available Data Suggests Noncompliance Could Be Low at
Loan Origination:
To be in compliance, the purchase of mandatory flood insurance must
occur when a mortgage is originated, and this insurance must be
retained and renewed over the life of the loan. No data were readily
available to enable us to assess noncompliance at both loan origination
and over the life of the loan and in all geographic areas. However,
other readily available data we obtained suggest that in highly flood-
prone areas, noncompliance could be low at loan origination. We
compared the number of new mortgages made in 1999 with new flood
insurance policies issued in certain of the nation‘s most highly flood-
prone census tract areas. For that period and for most of the
geographic areas we examined, this comparison did not suggest a major
noncompliance problem at loan origination, because only 44--9 percent
of the 471 census tracts we analyzed--showed fewer insurance policies
than mortgages. Moreover, buildings such as cooperatives and
condominiums--which are under different purchase requirements--exist
in some of these areas and could account for fewer policies than
mortgages being issued.
To obtain a perspective on the level of noncompliance with the
mandatory flood insurance purchase requirements at loan origination, we
first identified highly flood-prone census tracts [Footnote 11]1 where
90 to 100 percent of the properties are located in SFHAs. We then
compared data reported by lenders [Footnote 12]2 on new mortgages made
in 1999 by federally regulated lending institutions or guaranteed by a
federal agency with FEMA data on new flood insurance policies issued in
that year in each selected tract. These data, in the aggregate, do not
suggest that noncompliance is widespread at the time of loan
origination in highly flood-prone areas. For the 471 census tracts we
selected, located in 64 different counties, over 88,000 insurance
policies were issued in 1999, or about 88 percent more than the 47,000
mortgages originated in those census tracts during that period. A
summary, by county and state, of the census tract data we examined is
contained in appendix IV.
Most of the census tracts had more new insurance policies purchased
than mortgages originated. Of the 471 census tracts we analyzed, 413
had more new insurance policies issued than mortgages, and in many of
the census tracts substantially more flood insurance policies were
purchased than mortgages originated. For example, nearly 4 times more
flood insurance policies were purchased than new mortgages originated
in census tracts in 6 of the 64 counties. Two reasons for this could be
that some homeowners in the census tracts who did not have new
mortgages purchased insurance or that unregulated lenders originated a
significant number of mortgages in those areas and also required the
purchase of flood insurance. We contacted flood zone administrators for
2 of these counties, and they attributed the large number of insurance
policies purchased to many factors, including an increasing awareness
of flood dangers resulting from hurricanes affecting their counties
during 1999 as well as recent public outreach and education efforts.
Our analysis does suggest that a noncompliance problem at loan
origination might exist in some geographic areas. For counties
containing 44 of the census tracts--9 percent of the tracts we
examined--we were able to determine that there were fewer insurance
policies issued than mortgages. For example:
* In a Hawaii county that has 5 census tracts that are virtually
entirely in a SFHA, 357 loans were made but only 88 flood insurance
policies were issued.
* In a New Jersey county with 4 census tracts that are virtually
entirely in a SFHA, 291 loans were made but only 81 flood insurance
policies were issued.
* In a New York county with 1 census tract with 97 percent of the
properties in a flood zone, 98 mortgage loans were made but only one
new insurance policy was issued.
However, floodplain managers in the states mentioned above point out
that these areas are densely populated and contain many buildings that
are condominiums or, in the case of New York and New Jersey,
cooperatives. These structures have different purchase requirements
than other residential properties. For example, condominium owners may
not have to obtain a flood insurance policy if the building‘s
condominium association has purchased one that covers the entire
structure. Consequently, there would be fewer flood insurance policies
than new mortgages in those situations.
For the remaining 14 census tracts we analyzed, we also found that
there were fewer insurance policies than mortgages issued. However,
these census tracts are in counties where a number of insurance polices
were issued that could not be identified with any specific census tract
and which could account for the shortage of policies as compared with
mortgages. For example, in a North Carolina county with one census
tract that had 37 mortgages and only 15 insurance policies issued,
there were also 201 insurance policies that could not be identified
with any of the six census tracts in the county. It is possible that a
portion of these policies were actually for properties in the highly
flood-prone census tracts in these counties.
We discussed our analysis of mortgage and insurance data with officials
of the bank regulatory agencies, GSEs, and FEMA. The regulatory and GSE
officials stated that the analysis supports their position that few
concerns exist regarding noncompliance with flood insurance purchase
requirements. They stressed that they are confident that their
examination procedures are effective and appropriate. Additionally,
they said that our data were from 1999, before some of the regulators
had completed examinations of all institutions they oversee to assess
them for compliance with the current requirements. They believe that
any noncompliance that may exist will be further reduced after all
institutions have been examined and made fully aware of the flood
insurance compliance requirements.
FEMA officials agreed that the analysis indicates relatively low levels
of noncompliance at the time loans are made and that on the basis of
our analysis, noncompliance at the time of loan origination is not an
area of major concern. Nevertheless, they still believe that
significant noncompliance problems exist with insurance policy
retention and renewal. They believe that lenders and homeowners fail to
ensure that the insurance policies remain in force for the life of the
loan and pointed out that our analysis was unable to examine existing
mortgages to determine if insurance policies are being retained and
renewed as required over the life of the loan.
Mortgage, Flood Determination, and Insurance Policy Data Needed to
Fully Assess Compliance, but Challenges Exist:
Property-specific data on mortgages, flood zone determinations, and
flood insurance policies--obtained both at loan origination and at
various points during the life of the loan to ensure the insurance
remains in force--would be needed to fully assess compliance. Comparing
these data would allow computation of compliance rates nationally,
regionally, or locally and would--with an additional piece of data, the
mortgage lender identification numbers--identify specific noncomplying
lenders. However, there are a number of challenges to obtaining and
assessing these data. These include establishing data reporting
requirements for lenders to provide relevant mortgage data, designating
an organization to receive and compare these data, and determining the
costs and benefits of obtaining these data. The regulators and GSEs, on
the one hand, and FEMA, on the other, have differing viewpoints of the
viability of and need for obtaining these data.
Mortgage and Flood Zone Determination Data Would Need to Be Linked to
Flood Policy Data to Measure Compliance:
The three data elements that would have to be linked to fully measure
compliance are property addresses, flood zone determinations, and proof
of flood insurance for those properties. Property addresses would need
to be obtained for those properties financed by mortgages covered by
the NFIP legislation, namely, those made by federally regulated lending
institutions or guaranteed by federal agencies, or those purchased by
GSEs. At the time the loan is made, flood zone determinations for
properties associated with those mortgages are required to be performed
by the lender--making it possible to identify the pool of mortgages for
which flood insurance is required. Once this pool of mortgages is
identified, it would be necessary to match the individual mortgages to
the flood insurance policies issued to determine whether insurance
policies had been issued for those properties required to have them.
The results could be used to (1) compute compliance rates nationally,
regionally, and locally and (2) identify individual properties without
flood insurance at origination.
To monitor the status of compliance over the life of the mortgage,
updated mortgage and insurance information would be needed. Mortgages
are frequently sold and therefore held by a different entity.
Similarly, the status of flood insurance policies may change.
Currently, there are requirements for various notifications when these
events occur, and these changes are required to be recorded in loan
files.
Collection of an additional data element--lender identification
numbers-- would permit measurement of noncompliance on lender specific
levels. Lender identification numbers are necessary for identifying the
specific lender associated with a mortgage and for determining the
appropriate federal regulator. Obtaining lender identification numbers
would reveal which lenders did not ensure that flood insurance was
purchased and maintained when required.
Challenges Exist to Fully Measure Compliance:
A number of challenges exist to collect and assess the data needed to
determine compliance. First, reporting requirements would be needed to
centrally collect data components to determine if flood insurance is
being purchased as required when mortgages are originated. As
previously explained, for each mortgage originated by a regulated
lending institution or purchased by a GSE, key data identifying the
specific mortgaged property (i.e., property address), the flood zone
determination for the property, and proof of insurance for properties
in SFHAs would need to be compiled. Lenders, FEMA, and others currently
hold all or parts of these data. For example, lenders maintain all of
these data in their loan files, and FEMA maintains a database that
contains all insurance policy data. Consequently, no new data would
have to be generated, but they would have to be centrally reported.
Second, a single organization would need to be assigned the
responsibility for measuring compliance. This organization also would
need to have appropriate authority to collect the data needed to
measure compliance. Although some organizations have various
authorities to obtain data--for example, the bank regulators can
collect data from lenders, and FEMA can obtain data from insurers--no
organization currently has the authority to collect from lenders,
insurance companies, or other organizations all the data needed to
fully measure compliance. Specific legislative authority may be needed
to enable a single organization to collect the data necessary to
measure compliance.
Third, costs and benefits would need to be fully explored to determine
whether establishing a new system for measuring compliance is
justified. The regulators and GSEs, on one hand, and FEMA, on the
other, have differing viewpoints on the viability of and need for
obtaining compliance measurement data. In this regard, regulatory and
GSE officials said that this effort would result in significant costs
for lending institutions if they were required to report all flood
insurance-related mortgage data. An official from one regulatory agency
pointed out that although there are no data on the costs of
implementing new reporting systems, any new data requirement placed on
lenders would result in changes to the lenders‘ information systems.
The official estimated that costs could be in the millions of dollars
for even minimal changes, and for institutions that have older systems,
or that are not highly automated, additional data reporting
requirements could have a significant impact.
The regulatory and GSE officials also said that in addition to concerns
that obtaining this compliance measurement data would be costly, they
also believe that little benefit would be obtained through such action.
They stated that there continues to be no empirical evidence that there
is any widespread noncompliance with flood insurance requirements, and
that in fact, our analysis points to a high level of compliance.
Officials from these organizations added that as they do their
compliance examinations and reviews of lenders, they look at a sample
of a lender‘s entire portfolio of mortgages--both new and existing--and
if these examinations and reviews are ensuring compliance at
origination, they are also ensuring compliance over the life of the
mortgage loan. Consequently, according to these officials, without
further evidence of noncompliance problems, establishing a new process
to require reporting and monitoring of flood insurance data is not
justified.
Officials from many of the regulatory agencies believe that instead of
establishing a new compliance measurement program, it would be better
to have FEMA use the data it currently has to measure compliance and to
conduct additional post-disaster compliance studies. The officials
stated that FEMA has significant data on mortgages requiring flood
insurance, and that additional data to measure compliance could be
obtained from the insurance agents that sell flood insurance policies.
They further said that conducting compliance studies after disasters
have occurred could determine if there were any significant amounts of
noncompliance in the affected area. They added that more of these
studies would better determine if there actually are noncompliance
problems and help pinpoint geographic areas in which they may need to
shift greater focus to flood insurance compliance in their examination
activities.
FEMA officials, however, believe that establishing a comprehensive
noncompliance measurement program may be beneficial and appropriate.
They said that they remain concerned that insurance policies are not
being retained and renewed where required on existing mortgages, as
their data show that the retention rate for flood insurance policies is
about 90 percent, which is below the insurance industries‘ homeowners
policy retention rate of 95 percent. The FEMA officials said that if
lenders were adequately ensuring the renewal of flood insurance
policies, the retention rate would be similar. Therefore, they believe
that only a comprehensive program that gathers and analyzes data on
existing mortgages will resolve the debate over noncompliance and
ensure that both property owners and the federal government are
adequately protected. FEMA officials added that because FEMA is
involved in the selling of insurance policies and in the financial
condition of the insurance program, a comprehensive noncompliance
measurement program might more appropriately rest outside of FEMA in an
organization that would be more independent.
Additionally, FEMA officials stated that with the provisions in the
president‘s proposed budget that will significantly increase their
efforts to remap and update the nation‘s flood zones, establishing a
process to identify noncompliance is even more critical. They pointed
out that the remapping efforts will likely place more properties in
SFHAs, and more property owners--including those with existing
mortgages--will be required to purchase flood insurance. They expect
that this remapping will result in potentially more noncompliance, and
that a comprehensive noncompliance monitoring effort will be needed to
ensure that all owners of properties requiring flood insurance purchase
such insurance.
Finally, FEMA officials said that conducting post-disaster studies is
not the solution to the noncompliance debate. They said that post-
disaster studies can only offer a limited perspective on noncompliance
and do not address noncompliance issues for the nation as a whole.
Moreover, a major flaw with this approach would be that FEMA would be
identifying noncompliance when it is too late--after the disaster has
occurred and uninsured properties are flooded. They said that it is
much more important to identify noncomplying properties before they are
damaged in a disaster, thereby providing the opportunity to ensure that
property owners have insurance protection and minimizing the need for
federal disaster assistance for these properties. Lastly, FEMA
officials said that conducting post-disaster studies is very resource
intensive. They said that they do not have the resources and
capabilities to conduct any significant number of compliance studies.
Agency Comments and Our Evaluation:
We provided a draft of this report to FEMA, regulatory agencies--FDIC,
FRB, OCC, and OTS--and GSEs--Fannie Mae and Freddie Mac--that are
responsible for the issues discussed in this report. All of the
agencies generally agreed that the report presents an accurate and
objective presentation of the differing perspectives on noncompliance
with mandatory flood insurance purchase requirements. FEMA, FDIC, FRB,
Fannie Mae, and Freddie Mac provided letters commenting on the draft
that appear in appendixes V, VI, VII, VIII, and IX. OCC and OTS
provided clarifying language and technical comments that were
incorporated into the report as appropriate.
Three organizations provided additional perspectives and comments. FEMA
said that it continues to believe that significant problems exist with
insurance policy retention. It stated, as an example, that last year‘s
gains in new policies were offset by attrition from the previous years‘
number of policies in force. FEMA also described a number of strategies
it has initiated to improve policy retention. These strategies include
working with the regulatory agencies and GSEs to identify actions FEMA
could take to improve lender compliance; assessing state escrow laws
and systems to determine whether obstacles to flood insurance escrow
exist and, where necessary, work with states to resolve these
obstacles; and improving its flood insurance public education and
advertising campaign.
FRB maintained that compliance is generally satisfactory with the
institutions they supervise. It said that our analysis suggests low
levels of noncompliance at loan origination and that the report helped
narrow any future inquiry on lender noncompliance to areas of policy
renewal and retention. FRB added that on the basis of years of
experience in examining state member banks, it believes that those
banks have a good record of compliance with flood insurance purchase
requirements not only at loan origination but also during the time the
banks own the loan.
Freddie Mac commented that certain facts contradict FEMA‘s assertions
that noncompliance is substantial. Specifically, Freddie Mac noted that
FEMA acknowledges that compliance at origination is high and 90 percent
of policies are renewed. Therefore, it sees no basis for FEMA‘s belief
that noncompliance is substantial; rather, the evidence suggests that
noncompliance is marginal. Additionally, Freddie Mac commented that
FEMA should take a more proactive role in compliance monitoring by
collecting and analyzing data currently available to it and conducting
investigations to determine reasons for noncompliance. Freddie Mac said
that it does not share FEMA‘s belief that having responsibility for
compliance creates a conflict of interest with its responsibility for
managing the National Flood Insurance Program.
We will send copies of this report to the Director, Federal Emergency
Management Agency; Chairman, Federal Deposit Insurance Corporation;
Chairman, Board of Governors of the Federal Reserve System; Comptroller
of the Currency; Director, Office of Thrift Supervision; Chairman and
CEO, Fannie Mae; and Chairman and CEO, Freddie Mac. We will also make
copies available to others upon request. In addition, this report will
be available at no charge on the GAO Web site at http://www.gao.gov .
If you have any questions about this report, please call me or John
Schulze at (202) 512-2834. Key contributors to this report are listed
in appendix X.
JayEtta Z. Hecker Director, Physical Infrastructure:
Appendix I Objectives, Scope, and Methodology:
Federal Emergency Management Agency (FEMA) officials and bank
regulators disagree about whether lenders are fully complying with the
flood insurance purchase requirements of the National Flood Insurance
Program (NFIP). Given this disagreement, and concerned that lender
noncompliance could be high, the Subcommittee on VA, HUD, and
Independent Agencies, Senate Committee on Appropriations, directed us
to examine whether lenders are complying with the purchase
requirements. In response to that mandate and to requests from the
Senate Committee on Banking, Housing, and Urban Affairs and its
Subcommittee on Economic Policy, we focused our work on the following
questions:
1. What are the bases for the differing perspectives on lender
noncompliance?
2. What does other readily available data indicate about the level of
noncompliance?
3. What data would be needed to fully measure compliance?
To obtain an overall understanding of the NFIP, we analyzed the
program‘s history, regulations, policies, and procedures. We
interviewed and gathered studies from FEMA officials, federal
regulatory agencies, government- sponsored enterprises (GSE), flood
zone determination companies, mortgage companies, mortgage servicers,
insurance companies, and industry associations. We examined reports
issued by the FEMA Inspector General and documents from FEMA‘s Federal
Insurance and Mitigation Administration. In addition, we interviewed
this organization‘s former Administrator, Acting Administrator,
Director of Marketing, Lender Compliance Officer, and other officials
responsible for administering the NFIP. We also interviewed FEMA‘s
Assistant Inspector General who is responsible for that office‘s flood
insurance compliance review.
To address the first objective, we determined how four regulatory
agencies and two GSEs monitor lender compliance. Specifically, we
focused on the Federal Deposit Insurance Corporation (FDIC), the
Federal Reserve Board (FRB), the Office of the Comptroller of the
Currency (OCC), the Office of Thrift Supervision (OTS), the Federal
National Mortgage Association (Fannie Mae), and the Federal Home Loan
Mortgage Corporation (Freddie Mac). [Footnote 13]3 We interviewed
officials from each of these agencies, including 25 field managers and
bank examiners from the FDIC, FRB, OCC, and OTS. In addition, we
analyzed examination files from the FDIC, Federal Reserve Bank of New
York, OCC, and OTS to identify banks and thrifts that had been
subjected to civil monetary penalties and other enforcement actions; we
further examined correspondence between the GSEs and servicers. We also
observed FDIC and OTS bank examinations in the Baltimore, Md., area to
better understand the policies and procedures of such examinations.
Additionally, we reviewed FEMA‘s data and efforts to measure and assess
noncompliance. We interviewed officials from FEMA‘s Federal Insurance
and Mitigation Administration and obtained information and
documentation of FEMA‘s estimates on overall levels of noncompliance;
processes it uses to estimate structures in special flood hazard areas;
processes it uses to collect, report, and share flood insurance policy
data; and actions it has taken to inform the public about floodplain
mapping and compliance with mandatory purchase requirements. We
interviewed FEMA officials and flood zone determination industry
officials and obtained information and documentation on studies about
levels of participation in the NFIP and lender compliance issues. We
attended meetings and training sessions held by FEMA with insurance
officials, local government officials, and lender representatives and
observed discussions of noncompliance.
In determining what other readily available data indicates about the
level of noncompliance, we found that the data necessary to assess
lender noncompliance are currently not reported in a way to permit full
evaluation of this issue. However, we did determine a methodology that
would enable us to obtain a perspective on noncompliance at loan
origination. We compared the number of new mortgages made with the
number of flood insurance policies issued in the same locations, in
certain of the nation‘s highly flood-prone areas. This analysis
required that we (1) identify flood- prone areas; (2) determine the
number of new mortgages made in such areas that were subject to NFIP
regulations; (3) determine the number of flood insurance policies
written; and (4) compare the number of mortgages with the number of
flood insurance policies in certain areas to infer levels of lender
noncompliance in those selected areas. Data on properties with existing
mortgages in these flood-prone areas were not available; therefore, we
did not perform any analysis on the level of noncompliance on existing
mortgages. Further, we did not perform any analysis of the accuracy of
the determinations made by flood zone determination companies and used
by lenders as the basis for whether flood insurance is required.
Flood-Prone Area Data:
For our review, we defined as ’flood-prone areas“ all census tracts in
which 90 percent or more of the tract is in a flood zone. To identify
these census tracts, we used the percentage of properties determined to
be flood-prone as a proxy for the percentage of each census tract area
that may be flood- prone. We obtained data on flood zone determinations
from Transamerica Flood Hazard Certification, Inc., which has been
collecting information on properties in the United States since 1977.
Its database consisted of about 62 million properties nationwide for
which flood determinations have been made. Of those properties, 2.8
million, or 4.6 percent, have been certified as located in flood hazard
areas. We obtained this information by state, county, and census tract.
Transamerica‘s data covered properties in 59,506 census tract areas.
About 1 percent (742) of these census tracts had at least 90 percent of
the properties determined to be in SFHAs. We focused on these 742
census tract areas.
Mortgage Data--All New Mortgages in 1999 That Were Subject to NFIP
Regulations:
To identify the number of new mortgage loans that would be covered by
NFIP regulations in the flood-prone census areas, we used Home Mortgage
Disclosure Act (HMDA) data that regulators collected for the 1999
calendar year. The HMDA information shows the number of loans granted
during 1999. We refined the number of mortgages to be included in our
analysis by choosing only owner occupancy and single-family loans
subject to government regulation. We excluded business loans,
unregulated loans not purchased in the secondary market by either
Fannie Mae or Freddie Mac, and loans that were designated for home
improvements, multifamily dwellings, and refinances. This resulted in a
total of 3,717,735 mortgage loans in 1999. We then aggregated all loan
originations at the census-tract level.
Flood Insurance Data:
To identify the number of flood insurance policies written for the
flood- prone census-tract areas, we used NFIP data that FEMA collects
from insurance companies that issue policies. We obtained from FEMA a
database that aggregated the number of flood insurance policies written
in 1999 according to the state, county, and census tract of the
property. To obtain policy data that would be comparable to mortgage
data, we refined the policy data to include only new policy
transactions for principal residences. We excluded policies that were
not for a homeowner‘s principal residence or were only to cover the
contents of a property. This resulted in a total of 549,255 policies
for 1999. [Footnote 14]4 These data were aggregated at the census-tract
level.
Analysis of the Census- Tract, Mortgage, and Flood Insurance Data:
To determine whether the number of flood insurance policies in force
approximated the number of regulated mortgage loans made in flood-prone
areas, we merged the three types of data described above by census
tract within each state and county for 1999. We assumed that the
distribution of the properties, loans originated, and insurance
policies written were the same within each census tract area.
As previously indicated, we focused on those 742 census tract areas
that had at least 90 percent of their properties in flood areas. To
provide a greater degree of confidence that the data we obtained were
representative of the entire census tract, we developed additional
selection criteria whereby at least 20 loans had been made in that
census tract and at least 100 properties within the census tract had
flood-zone determinations. As a result, the number of census tracts we
examined totaled 471 covering 17 states. For these areas, we found that
46,965 loans had been made and 88,300 flood insurance policies had been
issued. [Footnote 15]5:
We did not attempt to independently verify the accuracy of the data
sets used for our analysis. We did, however, to the extent possible,
assess the reliability by (1) performing electronic tests (as described
below) and (2) discussing results of the testing and analysis with
knowledgeable individuals. We cross-checked Transamerica‘s
determination data with data from another flood zone determination
company (Geotrac of America, Inc.) to determine if both companies‘ data
identified the same flood-prone census tracts. We found a high degree
of correlation between the data of the two flood zone determination
companies. We also determined that the variables we used from the HMDA
data was complete in its coding and did not have questionable outliers.
Therefore, we determined that the data were reliable enough for the
purposes of this report.
To determine what data would be needed to fully measure compliance, we
analyzed the processes established by the participants in the NFIP to
collect, report, and share data on lender compliance with flood
insurance purchase requirements. We interviewed officials and gathered
documents from the Federal Insurance and Mitigation Administration,
federal regulators, GSEs, loan servicers, insurance companies and their
servicers, and related industry associations, including the National
Floodzone Determination Association, the Independent Bankers
Association of America, and the Mortgage Bankers Association. We made
site visits to flood zone determination companies in Austin and
Arlington, Tex.; Lakewood, Colo.; and Hasbrouck Heights, N.J.; and
interviewed officials with a flood zone determination company in
Norwalk, Ohio. These companies represent about 80 percent of the flood
zone determination market.
After determining how information pertaining to compliance is
processed, we developed a process that would allow better measurement
of noncompliance with the mandatory flood insurance purchase
requirements. We then discussed this process with FEMA and bank
regulatory officials to obtain their perspective on its viability,
costs, and benefits.
We conducted our review from April 2001 through April 2002 in
accordance with generally accepted government auditing standards.
Appendix III [End of section]
Federal financial institution regulators have primary responsibility
for ensuring that the institutions they supervise comply with the
requirements of the National Flood Insurance Program. The regulators
have issued uniform flood insurance regulations and examination
procedures for enforcing and monitoring lender compliance. The policies
and procedures are designed to ensure that flood zone determinations
for mortgaged properties are performed, flood insurance is obtained
when required, and flood insurance policies remain in force for the
life of the loan.
The National Flood Insurance Reform Act of 1994 directed that
regulatory agencies promulgate rules to implement the act‘s provisions
and to coordinate their development through the Federal Financial
Institutions Examination Council. The agencies‘ regulations became
effective on October 1, 1996, and established, among other provisions,
new requirements for escrowing flood insurance premiums, documenting
flood hazard determinations on the Standard Flood Hazard Determination
Form, and ’force-placing“ flood insurance under certain circumstances.
In November 1996, the regulators adopted uniform procedures for
assessing lender compliance with the new flood insurance regulations.
These procedures require that for the flood insurance component of the
examinations the regulators assess:
* whether an institution performs required flood determinations for
home mortgage loans, including mobile homes affixed to a permanent
foundation;
* if the institution requires flood insurance in the correct amount
when it makes, increases, extends, or renews a covered loan;
* if the institution provides the required notices to the borrower
whenever flood insurance is required as a condition of the loan;
* if the institution requires flood insurance premiums to be escrowed
when other items, such as hazard insurance and taxes, are required to
be escrowed; and:
* if the institution complies with the forced placement provisions in
cases where flood insurance on the loan is not sufficient to meet the
requirements of the regulation.
To fulfill these requirements, bank examiners review a sample of loan
files to verify that flood insurance requirements are met. For smaller
banks and thrifts, which make few mortgage loans, the sample may
consist of all loans made since the last examination, and all loans in
the portfolio known to be secured by properties in special flood hazard
areas. For larger institutions, examiners review a nonprojectable
sample of loans. Depending on the findings from those files, an
examiner may analyze additional loans for further examination. If a
lender appears to have failed to require adequate flood insurance
coverage on selected loans, it may be required to conduct a review of
its entire loan portfolio and report the results to the bank regulator.
If violations of the flood insurance requirements are detected during
an examination, corrective action may be required of the lender, and
fines can be levied against the lender by the regulatory organization
if it finds a pattern or practice of violations.
Bank regulators perform compliance examinations on a periodic basis,
generally every 12 to 60 months. In addition to compliance with flood
insurance requirements, these examinations cover compliance with other
consumer laws and regulations. The length of time between examinations
is determined by several factors, including the bank‘s rating at the
time of its last examination and the size of the institution. In
addition to regular examinations, examiners are to follow-up with
institutions in which violations have been found to verify that any
violations noted during the most recent examination have been resolved.
Appendix V [End of section]
The 1994 National Flood Insurance Reform Act directed Fannie Mae and
Freddie Mac to implement procedures designed to ensure that loans that
they purchase are covered by flood insurance for the term of the loans.
While GSEs have no regulatory authority over their sellers and
servicers, they require their sellers and servicers to comply with the
flood insurance requirements through their contracts with them. These
requirements are spelled out in the GSEs‘ Seller/Servicers Guides.
Fannie Mae and Freddie Mac also require that servicers have processes
in place that allow the servicer to identify map changes, determine
which mortgaged dwellings affected by map changes need flood insurance,
and to ensure that the affected borrowers obtain such insurance within
120 days of the effective date of the map change.
If Fannie Mae or Freddie Mac finds that a lender is not complying with
their requirements for flood insurance, they may require that the
lender repurchase the loans and correct deficiencies in their system
for ensuring compliance. Officials from both enterprises told us that
this occurs very rarely.
The act also directed the Office of Federal Housing Enterprise
Oversight (OFHEO), an independent agency within the Department of
Housing and Urban Development responsible for regulation of Fannie Mae
and Freddie Mac, to assess whether they have adopted and are adhering
to flood insurance compliance procedures, and to report on this
assessment in OFHEO‘s annual reports to Congress for 1996, 1998, and
2000. OFHEO reported that the policies and procedures established by
Fannie Mae and Freddie Mac with respect to the flood insurance
requirements under the Flood Disaster Protection Act were adequate and
were being used.
The review procedures for flood insurance established by Fannie Mae and
Freddie Mac are explained below.
Fannie Mae:
* Post purchase review: Flood insurance compliance is incorporated as
part of the monthly quality control reviews of a nonprojectable sample
of recently purchased or securitized mortgages. Lists of property
addresses are sent to two flood zone determination companies to review
the flood zone determinations on file for properties both in and
outside of flood zones. The mortgage file is checked to verify that a
copy of the special flood hazard determination form is present; the
loan is coded properly; and, if appropriate, evidence that flood
insurance coverage was obtained.
* Portfolio review: On an annual basis, Fannie Mae performs a review on
a sample of all loans it owns or has securitized to verify that sellers
and servicers appropriately obtained and have maintained flood
insurance, as applicable, throughout the term of the mortgage. The
scope of the review emphasizes areas where flood zone remapping has
occurred, or communities whose participation status in the National
Flood Insurance Program has changed, to ensure that sellers and
servicers are in compliance with the requirement to have procedures in
place to monitor such changes. For a nonprojectable sample of mortgages
in special flood hazard areas, sellers and servicers are required to
provide documentation to confirm that flood insurance is in force for
each selected mortgage, and that the mortgages were properly identified
at delivery.
* Quality control operational review: Fannie Mae regional offices
perform regular quality control reviews that examine sellers and
servicers‘ management, policies, and procedures, rather than examining
individual mortgage files. These reviews include on-site examination of
processes for ensuring the accuracy of the flood zone determinations
that are obtained. Generally, the largest sellers and servicers are
evaluated every year; others are reviewed every 2 to 3 years.
In addition, Fannie Mae is looking at various options to improve its
methodology for performing its flood insurance reviews. One such option
is the use of Geographic Information Systems data and flood maps to
target loans in its portfolio for flood reviews. This effort is
currently in the testing stages.
Freddie Mac:
* Quality control program: The data file for each mortgage purchased by
Freddie Mac must contain a special characteristic code describing the
mortgage‘s status regarding flood insurance, as follows: in a flood
zone with insurance coverage in place; in a flood zone with no flood
insurance coverage; not in a flood zone with flood insurance coverage;
or not in a flood zone and no flood insurance coverage. As part of
Freddie Mac‘s quality control program, a statistical sample of newly
delivered mortgages is reviewed for the correct special characteristic
codes regarding flood insurance; proper documentation of the flood zone
determination; and, if applicable, the flood insurance policy.
* Flood audit program: Freddie Mac auditors provide a list of addresses
for all of a servicer‘s mortgages to a flood zone determination
company. The flood zone determination company reviews the addresses in
the portfolio and arrives at a list of 25 properties located entirely
within special flood hazard areas. The list is then sent to several
other participating flood zone determination companies to verify that
the identified properties are within SFHAs. Each company performs
independent flood zone determinations for the listed properties;
Freddie Mac eliminates any properties for which the ’in“ determination
is not unanimous. At the sellers and servicers‘ facilities during the
audit, Freddie Mac audits the mortgage files for the selected
properties to verify that all of the flood insurance requirements are
met. This includes ensuring that flood insurance is in effect and that
the coverage meets Freddie Mac‘s requirements.
* Underwriting reviews: Freddie Mac reviews sellers and servicers‘
management controls for identifying properties in SFHAs, ensuring that
flood insurance is maintained, and ensuring that flood insurance
coverage is at least equivalent to that provided under the NFIP.
* Servicing review: Freddie Mac auditors review the management controls
that sellers and servicers have in place to (1) become aware of changes
in SFHAs, (2) ensure that the borrower obtains flood insurance coverage
if the sellers and servicers become aware that existing coverage does
not adequately protect the mortgaged premises, (3) ensure that the
borrower obtains the required insurance, and (4) ensure that the
sellers and servicers obtain the required coverage if the borrower does
not obtain it.
Appendix VII [End of section]
State: California; County: Contra Costa; Total number of census tracts
in county: 168; Number of: 1; Policies issued in flood-prone census
tracts: 48; Mortgages originated in flood-prone census tracts: 68;
Percentage of policies issued to mortgages originated: 71.
State: California; County: Kern; Total number of census tracts in
county: 109; Number of: 2; Policies issued in flood-prone census
tracts: 445; Mortgages originated in flood-prone census tracts: 183;
Percentage of policies issued to mortgages originated: 243.
State: California; County: Los Angeles; Total number of census tracts
in county: 1,652; Number of: 39; Policies issued in flood-prone census
tracts: 9,943; Mortgages originated in flood-prone census tracts:
2,706; Percentage of policies issued to mortgages originated: 367.
State: California; County: Merced; Total number of census tracts in
county: 53; Number of: 1; Policies issued in flood-prone census tracts:
136; Mortgages originated in flood-prone census tracts: 51; Percentage
of policies issued to mortgages originated: 267.
State: California; County: Orange; Total number of census tracts in
county: 484; Number of: 20; Policies issued in flood-prone census
tracts: 2,777; Mortgages originated in flood-prone census tracts:
1,216; Percentage of policies issued to mortgages originated: 228.
State: California; County: Sacramento; Total number of census tracts in
county: 207; Number of: 39; Policies issued in flood-prone census
tracts: 4,986; Mortgages originated in flood-prone census tracts:
2,713; Percentage of policies issued to mortgages originated: 184.
State: Florida; County: Broward; Total number of census tracts in
county: 164; Number of: 55; Policies issued in flood-prone census
tracts: 16,978; Mortgages originated in flood-prone census tracts:
11,217; Percentage of policies issued to mortgages originated: 151.
State: Florida; County: Charlotte; Total number of census tracts in
county: 22; Number of: 6; Policies issued in flood-prone census tracts:
1,825; Mortgages originated in flood-prone census tracts: 845;
Percentage of policies issued to mortgages originated: 216.
State: Florida; County: Collier; Total number of census tracts in
county: 31; Number of: 8; Policies issued in flood-prone census tracts:
1,657; Mortgages originated in flood-prone census tracts: 889;
Percentage of policies issued to mortgages originated: 186.
State: Florida; County: Dade; Total number of census tracts in county:
267; Number of: 48; Policies issued in flood-prone census tracts:
12,301; Mortgages originated in flood-prone census tracts: 9,395;
Percentage of policies issued to mortgages originated: 131.
State: Florida; County: Escambia; Total number of census tracts in
county: 54; Number of: 2; Policies issued in flood-prone census tracts:
280; Mortgages originated in flood-prone census tracts: 144; Percentage
of policies issued to mortgages originated: 194.
State: Florida; County: Glades; Total number of census tracts in
county: 2; Number of: 1; Policies issued in flood-prone census tracts:
47; Mortgages originated in flood-prone census tracts: 24; Percentage
of policies issued to mortgages originated: 196.
State: Florida; County: Hillsborough; Total number of census tracts in
county: 168; Number of: 7; Policies issued in flood-prone census
tracts: 1,178; Mortgages originated in flood-prone census tracts: 716;
Percentage of policies issued to mortgages originated: 165.
State: Florida; County: Lee; Total number of census tracts in county:
93; Number of: 24; Policies issued in flood-prone census tracts: 5,297;
Mortgages originated in flood-prone census tracts: 2,669; Percentage of
policies issued to mortgages originated: 198.
State: Florida; County: Manatee; Total number of census tracts in
county: 45; Number of: 4; Policies issued in flood-prone census tracts:
878; Mortgages originated in flood-prone census tracts: 213; Percentage
of policies issued to mortgages originated: 412.
State: Florida; County: Monroe; Total number of census tracts in
county: 29; Number of: 8; Policies issued in flood-prone census tracts:
1,518; Mortgages originated in flood-prone census tracts: 349;
Percentage of policies issued to mortgages originated: 435.
State: Florida; County: Palm Beach; Total number of census tracts in
county: 211; Number of: 3; Policies issued in flood-prone census
tracts: 1,057; Mortgages originated in flood-prone census tracts: 738;
Percentage of policies issued to mortgages originated: 143.
State: Florida; County: Pasco; Total number of census tracts in county:
38; Number of: 2; Policies issued in flood-prone census tracts: 778;
Mortgages originated in flood-prone census tracts: 325; Percentage of
policies issued to mortgages originated: 239.
State: Florida; County: Pinellas; Total number of census tracts in
county: 191; Number of: 23; Policies issued in flood-prone census
tracts: 3,709; Mortgages originated in flood-prone census tracts:
2,653; Percentage of policies issued to mortgages originated: 140.
State: Florida; County: Sarasota; Total number of census tracts in
county: 42; Number of: 5; Policies issued in flood-prone census tracts:
896; Mortgages originated in flood-prone census tracts: 439; Percentage
of policies issued to mortgages originated: 204.
State: Florida; County: St. Johns; Total number of census tracts in
county: 14; Number of: 2; Policies issued in flood-prone census tracts:
177; Mortgages originated in flood-prone census tracts: 91; Percentage
of policies issued to mortgages originated: 195.
State: Florida; County: St. Lucie; Total number of census tracts in
county: 39; Number of: 2; Policies issued in flood-prone census tracts:
121; Mortgages originated in flood-prone census tracts: 100; Percentage
of policies issued to mortgages originated: 121.
State: Georgia; County: Chatham; Total number of census tracts in
county: 71; Number of: 1; Policies issued in flood-prone census tracts:
206; Mortgages originated in flood-prone census tracts: 54; Percentage
of policies issued to mortgages originated: 381.
State: Hawaii; County: Honolulu; Total number of census tracts in
county: 200; Number of: 5; Policies issued in flood-prone census
tracts: 88; Mortgages originated in flood-prone census tracts: 357;
Percentage of policies issued to mortgages originated: 25.
State: Iowa; County: Pottawattamie; Total number of census tracts in
county: 26; Number of: 1; Policies issued in flood-prone census tracts:
102; Mortgages originated in flood-prone census tracts: 30; Percentage
of policies issued to mortgages originated: 340.
State: Louisiana; County: Assumption; Total number of census tracts in
county: 6; Number of: 1; Policies issued in flood-prone census tracts:
100; Mortgages originated in flood-prone census tracts: 30; Percentage
of policies issued to mortgages originated: 333.
State: Louisiana; County: Jefferson; Total number of census tracts in
county: 116; Number of: 38; Policies issued in flood-prone census
tracts: 5,491; Mortgages originated in flood-prone census tracts:
2,377; Percentage of policies issued to mortgages originated: 231.
State: Louisiana; County: Lafourche; Total number of census tracts in
county: 20; Number of: 5; Policies issued in flood-prone census tracts:
632; Mortgages originated in flood-prone census tracts: 169; Percentage
of policies issued to mortgages originated: 374.
State: Louisiana; County: Orleans; Total number of census tracts in
county: 184; Number of: 30; Policies issued in flood-prone census
tracts: 2,944; Mortgages originated in flood-prone census tracts:
1,131; Percentage of policies issued to mortgages originated: 260.
State: Louisiana; County: St. Bernard; Total number of census tracts in
county: 17; Number of: 1; Policies issued in flood-prone census tracts:
100; Mortgages originated in flood-prone census tracts: 40; Percentage
of policies issued to mortgages originated: 250.
State: Louisiana; County: St. Charles; Total number of census tracts in
county: 15; Number of: 1; Policies issued in flood-prone census tracts:
348; Mortgages originated in flood-prone census tracts: 203; Percentage
of policies issued to mortgages originated: 171.
State: Louisiana; County: St. Tammany; Total number of census tracts in
county: 33; Number of: 4; Policies issued in flood-prone census tracts:
683; Mortgages originated in flood-prone census tracts: 282; Percentage
of policies issued to mortgages originated: 242.
State: Louisiana; County: Terrebonne; Total number of census tracts in
county: 18; Number of: 2; Policies issued in flood-prone census tracts:
236; Mortgages originated in flood-prone census tracts: 73; Percentage
of policies issued to mortgages originated: 323.
State: Louisiana; County: Vermilion; Total number of census tracts in
county: 13; Number of: 1; Policies issued in flood-prone census tracts:
148; Mortgages originated in flood-prone census tracts: 26; Percentage
of policies issued to mortgages originated: 569.
State: Maryland; County: Worcester; Total number of census tracts in
county: 23; Number of: 5; Policies issued in flood-prone census tracts:
657; Mortgages originated in flood-prone census tracts: 218; Percentage
of policies issued to mortgages originated: 301.
State: Mississippi; County: Harrison; Total number of census tracts in
county: 40; Number of: 1; Policies issued in flood-prone census tracts:
191; Mortgages originated in flood-prone census tracts: 62; Percentage
of policies issued to mortgages originated: 308.
State: New Jersey; County: Atlantic; Total number of census tracts in
county: 71; Number of: 7; Policies issued in flood-prone census tracts:
1,200; Mortgages originated in flood-prone census tracts: 407;
Percentage of policies issued to mortgages originated: 295.
State: New Jersey; County: Bergen; Total number of census tracts in
county: 210; Number of: 1; Policies issued in flood-prone census
tracts: 114; Mortgages originated in flood-prone census tracts: 56;
Percentage of policies issued to mortgages originated: 204.
State: New Jersey; County: Cape May; Total number of census tracts in
county: 23; Number of: 7; Policies issued in flood-prone census tracts:
1,583; Mortgages originated in flood-prone census tracts: 593;
Percentage of policies issued to mortgages originated: 267.
State: New Jersey; County: Hudson; Total number of census tracts in
county: 161; Number of: 4; Policies issued in flood-prone census
tracts: 81; Mortgages originated in flood-prone census tracts: 291;
Percentage of policies issued to mortgages originated: 28.
State: New Jersey; County: Monmouth; Total number of census tracts in
county: 147; Number of: 1; Policies issued in flood-prone census
tracts: 49; Mortgages originated in flood-prone census tracts: 45;
Percentage of policies issued to mortgages originated: 109.
State: New Jersey; County: Ocean; Total number of census tracts in
county: 87; Number of: 9; Policies issued in flood-prone census tracts:
1,175; Mortgages originated in flood-prone census tracts: 675;
Percentage of policies issued to mortgages originated: 174.
State: New Mexico; County: Valencia; Total number of census tracts in
county: 12; Number of: 1; Policies issued in flood-prone census tracts:
90; Mortgages originated in flood-prone census tracts: 35; Percentage
of policies issued to mortgages originated: 257.
State: New York; County: Kings; Total number of census tracts in
county: 789; Number of: 1; Policies issued in flood-prone census
tracts: 0; Mortgages originated in flood-prone census tracts: 21;
Percentage of policies issued to mortgages originated: 0.
State: New York; County: Nassau; Total number of census tracts in
county: 270; Number of: 3; Policies issued in flood-prone census
tracts: 521; Mortgages originated in flood-prone census tracts: 217;
Percentage of policies issued to mortgages originated: 240.
State: New York; County: New York; Total number of census tracts in
county: 298; Number of: 1; Policies issued in flood-prone census
tracts: 1; Mortgages originated in flood-prone census tracts: 98;
Percentage of policies issued to mortgages originated: 1.
State: North Carolina; County: Beaufort; Total number of census tracts
in county: 10; Number of: 1; Policies issued in flood-prone census
tracts: 156; Mortgages originated in flood-prone census tracts: 36;
Percentage of policies issued to mortgages originated: 433.
State: North Carolina; County: Dare; Total number of census tracts in
county: 6; Number of: 1; Policies issued in flood-prone census tracts:
15; Mortgages originated in flood-prone census tracts: 37; Percentage
of policies issued to mortgages originated: 41.
State: North Carolina; County: New Hanover; Total number of census
tracts in county: 31; Number of: 1; Policies issued in flood-prone
census tracts: 148; Mortgages originated in flood-prone census tracts:
34; Percentage of policies issued to mortgages originated: 435.
State: North Carolina; County: Pamlico; Total number of census tracts
in county: 2; Number of: 1; Policies issued in flood-prone census
tracts: 137; Mortgages originated in flood-prone census tracts: 35;
Percentage of policies issued to mortgages originated: 391.
State: North Dakota; County: Grand Forks; Total number of census tracts
in county: 19; Number of: 1; Policies issued in flood-prone census
tracts: 76; Mortgages originated in flood-prone census tracts: 20;
Percentage of policies issued to mortgages originated: 380.
State: South Carolina; County: Beaufort; Total number of census tracts
in county: 22; Number of: 5; Policies issued in flood-prone census
tracts: 710; Mortgages originated in flood-prone census tracts: 203;
Percentage of policies issued to mortgages originated: 350.
State: South Carolina; County: Charleston; Total number of census
tracts in county: 89; Number of: 5; Policies issued in flood-prone
census tracts: 832; Mortgages originated in flood-prone census tracts:
328; Percentage of policies issued to mortgages originated: 254.
State: South Carolina; County: Colleton; Total number of census tracts
in county: 9; Number of: 1; Policies issued in flood-prone census
tracts: 50; Mortgages originated in flood-prone census tracts: 24;
Percentage of policies issued to mortgages originated: 208.
State: Texas; County: Brazoria; Total number of census tracts in
county: 55; Number of: 1; Policies issued in flood-prone census tracts:
139; Mortgages originated in flood-prone census tracts: 61; Percentage
of policies issued to mortgages originated: 228.
State: Texas; County: Cameron; Total number of census tracts in county:
64; Number of: 1; Policies issued in flood-prone census tracts: 198;
Mortgages originated in flood-prone census tracts: 62; Percentage of
policies issued to mortgages originated: 319.
State: Texas; County: El Paso; Total number of census tracts in county:
95; Number of: 1; Policies issued in flood-prone census tracts: 88;
Mortgages originated in flood-prone census tracts: 26; Percentage of
policies issued to mortgages originated: 338.
State: Texas; County: Galveston; Total number of census tracts in
county: 67; Number of: 9; Policies issued in flood-prone census tracts:
1,169; Mortgages originated in flood-prone census tracts: 485;
Percentage of policies issued to mortgages originated: 241.
State: Texas; County: Harris; Total number of census tracts in county:
582; Number of: 2; Policies issued in flood-prone census tracts: 135;
Mortgages originated in flood-prone census tracts: 74; Percentage of
policies issued to mortgages originated: 182.
State: Texas; County: Taylor; Total number of census tracts in county:
36; Number of: 4; Policies issued in flood-prone census tracts: 289;
Mortgages originated in flood-prone census tracts: 141; Percentage of
policies issued to mortgages originated: 205.
State: Virginia; County: Accomack; Total number of census tracts in
county: 9; Number of: 1; Policies issued in flood-prone census tracts:
130; Mortgages originated in flood-prone census tracts: 26; Percentage
of policies issued to mortgages originated: 500.
State: Virginia; County: Norfolk City; Total number of census tracts in
county: 90; Number of: 1; Policies issued in flood-prone census tracts:
66; Mortgages originated in flood-prone census tracts: 41; Percentage
of policies issued to mortgages originated: 161.
State: Virginia; County: Poquoson City; Total number of census tracts
in county: 3; Number of: 1; Policies issued in flood-prone census
tracts: 78; Mortgages originated in flood-prone census tracts: 40;
Percentage of policies issued to mortgages originated: 195.
State: Washington; County: Skagit; Total number of census tracts in
county: 12; Number of: 1; Policies issued in flood-prone census tracts:
112; Mortgages originated in flood-prone census tracts: 58; Percentage
of policies issued to mortgages originated: 193.
State: Total; County: [Empty]; Total number of census tracts in county:
8,134; Number of: 471; Policies issued in flood-prone census tracts:
88,300; Mortgages originated in flood-prone census tracts: 46,965;
Percentage of policies issued to mortgages originated: 188.
[End of table]
Source: GAO analysis of FEMA, HMDA, and TransAmerica data.
Appendix IX [End of section]
Appendix XI [End of section]
Appendix XIII [End of section]
Appendix XV [End of section]
Appendix XVII [End of section]
Appendix XIX [End of section]
GAO Contacts:
JayEtta Z. Hecker (202) 512-2834 John R. Schulze (202) 512-2834:
Staff Acknowledgments:
In addition to those named above, Martha Chow, Lawrence D. Cluff, Colin
J. Fallon, Kerry D. Hawranek, DuEwa A. Kamara, Signora J. May, John T.
McGrail, Lisa M. Moore, Patricia D. Moore, Bob Procaccini, and John J.
Strauss made key contributions to this report.
(394005):
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FOOTNOTES
[1] A federally regulated lending institution is any bank, savings and
loan association, credit union, farm credit bank, federal land bank
association, production credit association, or similar institution
supervised by a federal entity for lending regulation.
[2] A GSE is a privately owned, federally chartered corporation that
serves a public purpose.
[3] U.S. General Accounting Office, Flood Insurance: Information on the
Mandatory Purchase Requirement, GAO/RCED-90-141FS (Washington, D.C.:
Aug. 22, 1990).
[4] U.S. General Accounting Office, Flood Insurance: Emerging
Opportunity to Better Measure Certain Results of the National Flood
Insurance Program, GAO-01-736T (Washington, D.C.: May 15, 2001).
[5] P.L. 90-448.
[6] Fannie Mae and Freddie Mac are GSEs chartered by the Congress to
support residential housing by providing a secondary market for
mortgages.
[7] There are some exceptions to these requirements. A property that
meets all of these criteria may be exempted if it can be proven that
the property‘s elevation actually exceeds the flood plain even though
it is not accurately recorded on the flood map. In such cases, FEMA
issues letters of map amendment or letters of map revision. Conversely,
homeowners without mortgages or whose mortgages are not made by
regulated lenders may be required to purchase and maintain flood
insurance as a condition of accepting federal disaster relief.
[8] A servicer is the entity responsible for (1) receiving any
scheduled, periodic payments from a borrower under the terms of a loan,
including amounts for taxes, insurance premiums, and other charges with
respect to the property securing the loan; and (2) making payments of
principal and interest and any other payments from the amounts received
from the borrower as may be required under the terms of the loan. Some
lenders do their own servicing, while others sell the servicing rights
to loans in their portfolio.
[9] FEMA Office of Inspector General, Opportunities to Enhance
Compliance with Homeowner Flood Insurance Purchase Requirements, I-02-
00 (Washington, D.C.: Aug. 2000). FEMA Region I, Vermont Lender
Compliance with the Flood Disaster Protection Act of 1973 and the Title
V of the Riegle Community Development and Regulatory Improvement Act of
1994, DR-1228-VT (Boston, Mass.: Apr. 1999 Draft).
[10] [0] The sampled properties were located within the SFHA.
[11] [1] A census tract is a small, relatively permanent statistical
subdivision of a county.
[12] [2] Under the Home Mortgage Disclosure Act, mortgage data must be
reported by nondepository lenders that have assets above $10 million or
depository institutions that have assets above $29 million, maintain a
home or branch office in a metropolitan statistical area (MSA), or make
loans in a MSA. Institutions that make 100 or more loans (including
refinancings) during the calendar year are also required to report.
[13] [3] The regulators we chose account for most of the pertinent
mortgage market. We did not include the Farm Credit Administration,
National Credit Union Administration, Federal Home Administration,
Veterans Affairs Administration, or the Rural Housing Service. These
agencies were excluded because they either originate a small percentage
of all outstanding loans or because their loan programs fall under the
jurisdiction of one of the regulatory agencies. The Government National
Mortgage Association was excluded because it does not have direct
responsibility for compliance with the mandatory purchase of flood
insurance requirements.
[14] [4] Of the policies written, 26,544 (5 percent) could not be
identified with a census tract and were not used in our analysis.
GAO‘s Mission:
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exists to support Congress in meeting its constitutional
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of the federal government for the American people. GAO examines the use
of public funds; evaluates federal programs and policies; and provides
analyses, recommendations, and other assistance to help Congress make
informed oversight, policy, and funding decisions. GAO‘s commitment to
good government is reflected in its core values of accountability,
integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
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can print these documents in their entirety, including charts and other
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Orders should be sent to:
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441 G Street NW,
Room LM Washington,
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To order by Phone:
Voice: (202) 512-6000:
TDD: (202) 512-2537:
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Contact:
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Public Affairs:
Jeff Nelligan, managing director, NelliganJ@gao.gov (202) 512-4800 U.S.
General Accounting Office, 441 G Street NW, Room 7149 Washington, D.C.
20548:[15] [5] We cannot say with certainty that any particular loan we
identified definitely required flood insurance. We did not have
property addresses for insurance policies or mortgages.
