National Flood and Erosion Insurance and Mitigation Act of 1989

National Flood and Erosion Insurance and Mitigation Act of 1989 - Amends the Flood Disaster Protection Act of 1973 to allow each Federal instrumentality responsible for the supervision, approval, regulation, or insuring of banks, savings and loan associations, or similar institutions to promulgate regulations to direct that any premiums and fees for flood insurance under the Act on any property for which a loan has been made for acquisition or construction purposes shall be paid to the mortgage lender for the duration of the loan. Requires the lender to deposit the premiums in an escrow account on behalf of the borrower. States that upon receipt of notice that insurance premiums are due, the balance of the escrow account remaining shall be paid to the provider of the insurance.

Directs each Federal instrumentality responsible for the supervision, approval, regulation, or insuring of banks, savings and loan associations, or similar institutions to promulgate regulations to impose a civil penalty on any such institution that fails to require the purchase of flood insurance for a property for which insurance is required under regulations issued pursuant to such Act. Directs that any penalties collected shall be paid into the U.S. Treasury and credited as miscellaneous receipts.

Amends the National Flood Insurance Act of 1968 (such Act) to require additional written notification of special flood hazards during the term of any applicable loan upon each notice of policy renewal or not less than once every three years remaining on the date of the loan transaction, whichever occurs more often. Requires the affected institutions to retain a record of the receipt of such notices by the recipients. Specifies notification contents. Provides a penalty for a violation of such requirement.

Requires the Director of the Federal Emergency Management Agency, if any property covered by a contract for flood insurance under such Act is designated a repetitive-loss property by the Director, or at the request of any owner of any property that has previously filed a claim for losses under a contract for flood insurance under such Act, to evaluate the need for, and feasibility of, modifications to the property to greatly reduce or eliminate the potential for repeat claims regarding such property.

Requires the Director to report the findings of such evaluation to the owner of the property before payment of any claim (if one is pending) or within six months after the commencement of the evaluation, whichever occurs earlier. Provides that such report shall include recommendations for modifications to the property, which may include elevating, flood proofing, and removing or relocating any structure on the property. Requires the Director to give preference to removing and or relocating structures if specific conditions are met.

Authorizes the Director to make grants to States that conduct such evaluations through agreements with the Director to carry out the evaluations.

Requires the Director to establish in the U.S. Treasury a revolving fund to be known as the National Flood Mitigation Fund. Provides that such fund shall be credited with: (1) five percent of any premiums paid to the National Flood Insurance Fund under such Act; (2) any repayments of loans made from the National Flood Mitigation Fund pursuant to such Act; and (3) any funds that were appropriated to carry out provisions of the National Flood Insurance Act of 1968 that are unexpended on the date of the enactment of this Act. Authorizes the Director to invest any excess amounts in interest-bearing obligations issued or guaranteed by the United States.

Requires the Director to establish a program to make loans available from any amounts in the National Flood Mitigation Fund to owners of property for which flood mitigation recommendations have been made for the purposes of carrying out the recommended modifications.

Requires the Director to establish a program to negotiate with, and make assistance available to, any State or area that meets certain requirements of such Act from any amounts in the National Flood Mitigation Fund for the purchase of any real property on which is located a heavily damaged structure. Sets forth criteria for such assistance. Requires the Director to establish a similar program with respect to the purchase of property in areas of critical hazard. Prohibits the Director from providing assistance to a community for the purchase of property in critical hazard areas unless such community has developed comprehensive plans to provide for flood hazard, erosion, and post-storm response. Requires that any property purchased with assistance under this Act be devoted to open space, recreational, or public access uses. Requires the Director to provide that any owner of any structure that receives assistance under this Act for removal or relocation of the structure may not rebuild or relocate such structure in any area of critical hazard, area of erosion, or wetlands area.

Requires the Director to make flood insurance available in only those States or areas which have established erosion setbacks within 18 months of the enactment of this Act that prohibit construction or relocation of: (1) any structure consisting of one to four dwelling units at a point seaward of the 50-year erosion setback; and (2) any other structure at a point seaward of the 75-year erosion setback.

Requires premium rates for structures located in areas identified by the Director as areas of erosion to be stated so as to reflect the risks associated with erosion and sea-level rise.

Requires the Director, once during each five-year period (the first such period beginning on the date of the enactment of this Act) or more often as the Director determines necessary because of storms, high erosion rates, increased watershed development, or other extraordinary situations, to assess the need to revise and update all flood-plain areas and flood risk zones identified, delineated, or established under the Act. Directs the Director to revise and update any flood-plain areas and flood-risk zones upon: (1) the determination of the Director, according to such assessment, that revision and updating are necessary for the areas and zones; or (2) the request from any State or local government stating that specific flood-plain areas and flood-risk zones in the State or locality need revision or updating (if sufficient technical, engineering, or other justification is provided).

Makes the National Flood Insurance Fund available for revising and updating flood-plain areas and flood-risk zones.