I applied for a mortgage loan, and the bank is forcing me to buy flood insurance. Can the bank do this?

Yes.  If your home is located in a Special Flood Hazard Area (SFHA) in which flood insurance is available under the National Flood Insurance Act (NFIA or Act), any federally regulated lender will require you to purchase flood insurance before you get a mortgage.

You do not have to purchase the flood insurance policy from the bank.  It may be purchased through insurance companies, which sell policies through their network of agents.  Federal flood insurance coverage is provided by the Federal Emergency Management Agency (FEMA) and its National Flood Insurance Program (NFIP). Flood insurance overage may also be provided by private insurance companies.

On property that is not subject to the NFIA requirements, any requirement for flood insurance is a matter of contract between the lender and borrower.

September 2019