A community that does not join the NFIP, has withdrawn from the program, or is suspended from it faces the following sanctions:
¨ Flood insurance will not be available. No resident will be able to purchase a flood insurance policy.
¨ If the community withdraws or is suspended, existing flood insurance policies will not be renewed.
¨ No Federal grants or loans for development may be made in identified flood hazard areas under programs administered by Federal agencies such as HUD, EPA, and SBA.
¨ No Federal disaster assistance may be provided to repair insurable buildings located in identified flood hazard areas for damage caused by a flood.
¨ No Federal mortgage insurance or loan guarantees may be provided in identified flood hazard areas. This includes policies written by FHA, VA, and others.
¨ Federally insured or regulated lending institutions, such as banks and credit unions, must notify applicants seeking loans for insurable buildings in flood hazard areas that:
-- There is a flood hazard and
-- The property is not eligible for Federal disaster relief.
These sanctions can be severe on any community with a substantial number of buildings in the floodplain. Most communities with a flood problem have joined the NFIP and are in full compliance with their regulatory obligations.