What happens if a community does not participate in the NFIP?
Participation in the NFIP is voluntary, yet for properties located in non-participating communities flood insurance through the NFIP is not available and disaster assistance is limited. In the event of a flood disaster, federal disaster assistance is not available for repair or reconstruction of buildings located in the Special Flood Hazard Area (SFHA). Federally backed loans, such as those made through the Federal Housing Administration, the Department of Veterans Affairs, or the Small Business Administration, cannot be made for acquisition or construction of improved real estate located in the SFHA. However, conventional loans can be made, even on properties in the SFHA. Even though flood insurance is not available, lending institutions are still required to determine if the improved real estate is within the SFHA. Lending institutions must consider the risks of making loans on these properties given that flood protection is limited. Flood insurance might be available through private
