Most financial institutions accomplish the notice of servicer's identity requirements by ensuring they are listed as the loss payee on the borrower's (or their own forced placed) flood insurance policy. When servicing is sold, the seller is responsible notify the insurance agent (or the FEMA).
From the flood FAQs:
45. When a regulated lender makes a designated loan and will be servicing that loan, what are the
requirements for notifying the Director of FEMA or the Director’s designee?
Answer: FEMA stated in a June 4, 1996, letter that the Director’s designee is the insurance company issuing the flood insurance policy. The borrower’s purchase of a policy (or the regulated lender’s force placement of a policy) will constitute notice to FEMA when the regulated lender is servicing that loan. In the event the servicing is subsequently transferred to a new servicer, the regulated lender must provide notice to the insurance company of the identity of the new servicer no later than 60 days after the effective date of such a change.
FAQs 46 - 50 provide additional guidance on notification requirements.
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Adam Witmer, CRCM
All statements are my opinion, not those of my employer, and should not be taken as legal advice.
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