Which financial institution type does NOT typically require flood insurance as a condition for their loans?

Federal credit unions generally do not require flood insurance as a condition for their loans because they are not governed by the same regulatory framework that enforces such requirements for other financial institutions. The National Flood Insurance Program (NFIP) mandates flood insurance for federally backed loans, which primarily affects banks and lending institutions that operate under federal guidance and oversight.

Conventional banks, for example, must adhere to these federal requirements, and loans backed by government entities like the Department of Veterans Affairs also necessitate flood insurance in flood-prone areas. Similarly, HUD Community Development Block Grants can involve federal funding that stipulates the need for flood insurance. Therefore, federal credit unions stand out as an exception in this context, lacking the strict requirement for flood insurance.