No, we are not aware of any law or rule that would require you to notify the borrower that the borrower’s flood insurance coverage might not cover the home’s replacement cost. For example, the flood insurance regulations include a model “Notice of special flood hazards,” which does not specifically mention the replacement cost of the home. However, it does explain the scope of flood insurance coverage for the borrower: “Flood insurance coverage under the NFIP is limited to the overall value of the property securing the loan minus the value of the land on which the property is located. . . Federal disaster relief assistance (usually in the form of a low-interest loan) may be available for damages incurred in excess of your flood insurance if your community's participation in the NFIP is in accordance with NFIP requirements.”

For resources related to our guidance, please see below:

• Flood insurance regulations, Appendix A — Sample Form of Notice of Special Flood Hazards and Availability of Federal Disaster Relief Assistance
•  12 CFR 208.25(i)(5) (a bank that uses the notice in Appendix A will be considered to be in compliance with the requirement for notice)