Prohibits the Director from providing flood insurance to prospective insureds for new or lapsed policies at rates less than estimated risk premium rates.

Instructs the Director to issue final regulations establishing a revised definition of areas of special flood hazards.

Subjects certain residual risk areas to the mandatory purchase requirements of the Flood Disaster Protection Act of 1973.

Permits adjustment of the risk premium rate to reflect the flood risk of property located in an area participating in the national flood insurance program.

Instructs the Director to make flood insurance available only in states or areas determined to have given satisfactory assurance that by December 31, 2008, state-charted lending institutions not insured by the Federal Deposit Insurance Corporation (FDIC) shall be subject to state regulations consistent with the Flood Disaster Protection Act of 1973.

Includes catastrophic loss years within the calculation of an average historical loss year.

Instructs the Director to establish in the Treasury a National Flood Insurance Reserve Fund.

Establishes the Technical Mapping Advisory Council to recommend mapping standards and guidelines for flood insurance rate maps.

States that any area located within the 500-year flood plain is not subject to certain mandatory purchase requirements of the Flood Disaster Protection Act of 1973.

Prescribes guidelines for mandatory participation of representatives of the Director in state disaster claims mediation programs.

Instructs the Director to establish an appeals process for flood insurance policyholders regarding claims, proofs of loss, and loss estimates.

Flood Insurance Reform and Modernization Act of 2006 - (Sec. 4) Amends the National Flood Insurance Act of 1968 (Act) to require the Director of the Federal Emergency Management Agency (FEMA) to estimate the exclusion of prospective insureds from purchasing flood insurance at rates less than specified risk premium rates for certain properties, including: (1) property which is not the primary residence of an individual; (2) severe repetitive loss property; (3) property that has incurred flood-related damage in which the cumulative amounts of payments equaled or exceeded its fair market value; (4) any business property; and (5) any property which on or after enactment of this Act has experienced or sustained substantial damage exceeding 50% of its fair market value, or substantial improvement exceeding 30% of its fair market value.

Prohibits the Director from providing flood insurance to prospective insureds for new or deliberately lapsed policies at rates less than estimated risk premium rates.

(Sec. 5) Instructs the Director to issue final regulations establishing a revised definition of areas of special flood hazards for purposes of the National Flood Insurance Program not later than 90 days after enactment of this Act.

Subjects certain residual risk areas to the mandatory purchase requirements of the Flood Disaster Protection Act of 1973.

(Sec. 6) Permits adjustment of the risk premium rate in order to reflect the flood risk of property located in an area participating in the national flood insurance program.

(Sec. 7) Instructs the Director to make flood insurance available only in states or areas determined to have given satisfactory assurance that by December 31, 2008, state-charted lending institutions not insured by the Federal Deposit Insurance Corporation (FDIC) shall be subject to state regulations consistent with the Flood Disaster Protection Act of 1973.

(Sec. 9) Modifies requirements governing escrow of flood insurance payments.

Requires notice to the policyholder that insurance coverage may cease upon final payment of the mortgage.

(Sec. 10) Directs the Secretary of the Treasury (Secretary) to transfer, without securing any notes or other obligations from the Director, the sums necessary for the payment of property damage or loss claims covered by the National Flood Insurance Program, including any sums which exceed amounts borrowed from the Secretary by the Director.

(Sec. 11) States that the Secretary relinquishes the right to any repayment of amounts due from the Director in connection with the exercise of the statutory authority vested to the Director to borrow such sums, to the extent they were used to pay flood insurance claims under the National Flood Insurance Program for any property damage or loss resulting from the hurricanes of 2005.

(Sec. 12) Prescribes a minimum annual deductible for claims under the National Flood Insurance Program of $2,000 or $1,000, depending on construction or substantial improvement before or after December 31, 1974.

(Sec. 13) Instructs the Director to prescribe, after providing notice, chargeable premium rates that are adequate, on the basis of accepted actuarial principles, to cover the average historical loss year obligations incurred by the National Flood Insurance Fund.

Includes catastrophic loss years within the calculation of an average historical loss year.

(Sec. 14) Instructs the Director to establish in the Treasury a National Flood Insurance Reserve Fund to meet expected future obligations of the flood insurance program.

(Sec. 15) Sets forth a repayment plan for funds borrowed by the Director.

(Sec. 16) Establishes the Technical Mapping Advisory Council to recommend to the Director mapping standards and guidelines for flood insurance rate maps.

(Sec. 17) Requires the Director to establish a program to review, update, and maintain National Flood Insurance Program rate maps in coordination with such Council.

(Sec. 18) Repeals the limitation on the amount of state contributions for updating flood maps.

(Sec. 19) States that any area located within the 500-year floodplain is not subject to certain mandatory purchase requirements of the Flood Disaster Protection Act of 1973.

(Sec. 20) Amends the Real Estate Settlement Procedures Act of 1974 to require that mandatory special information booklets include notice of flood insurance availability, whether or not the real estate is located in a special flood hazard area.

(Sec. 21) Prescribes conditions for permissible testing of a residential structure built for the purpose of testing a new flood proofing technology in a locale that receives mitigation assistance under the Act.

(Sec. 22) Prescribes requirements for mandatory participation of representatives of the Director in state disaster claims mediation programs.

(Sec. 23) Instructs the Director to: (1) establish an appeals process for flood insurance policyholders regarding claims, proofs of loss, and loss estimates; and (2) continue to work with the insurance industry, state insurance regulators, and other interested parties to implement the minimum training and education standards for all insurance agents who sell flood insurance policies.

(Sec. 24) Directs the Comptroller General to study and report to certain congressional committees regarding: (1) "Write Your Own Policies" issued by entities authorized by the Director; (2) an audit of financial transactions of the National Flood Insurance Program relating to the consequences of Hurricane Katrina and other hurricanes of the 2005 season; (3) specified aspects of the National Flood Insurance Program, including an evaluation and analysis of it; (4) the composition of the remaining pre-FIRM structures explicitly receiving discounted premium rates under the Act, including the historical basis for such subsidy and whether it has outlasted its purpose; and (5) the feasibility of allowing individuals who reside in communities not currently participating in the National Flood Insurance Program to purchase flood insurance from the Program.

Instructs the Director to report annually to certain congressional committees on the operations, activities, budget, receipts, and expenditures of the National Flood Insurance Program for the preceding 12-month period.