What is the purpose of the Flood Disaster Protection Act?

• A. Ensures flood insurance when required
• B. Provides floodplain mapping
• C. Requires disclosure of flood risk in all loans
• D. Establishes flood insurance subsidies

Answer: (A)

The act makes flood insurance a required condition for federally related loans secured by real estate or mobile homes located in flood-prone areas. By mandating that borrowers carry appropriate flood insurance and that lenders obtain and maintain it (often with escrow of premiums), the government reduces the risk to the loan and to taxpayers after flood events and protects both borrowers and lenders from catastrophic losses.

Floodplain mapping and broad disclosure obligations are handled by other programs or statutes, and subsidies are not the primary focus of this act.