July 28, 2014
July 25, 2014
Flood Insurance Changes
On March 29, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the National Credit Union Administration, and the Farm Credit Administration (the Agencies) issued interagency guidance to inform financial institutions about revisions to the Flood Disaster Protection Act of 1973 (FDPA), which was amended by the Biggert-Waters Flood Insurance Reform Act of 2012 (BWFI Act).
The following provisions of the BWFI Act became effective upon enactment:
Amendments to the forced placement provisions of the FDPA.
The increase to $2,000 of the maximum civil money penalty for an FDPA violation and the elimination of the annual penalty cap.
The following provisions of the BWFI Act are not effective until regulations are issued:
The requirement that lenders accept private flood insurance policies if the coverage satisfies the standards specified in the BWFI Act.
The requirement that lenders disclose to borrowers certain information regarding the National Flood Insurance Program.
The requirement that certain lenders and servicers establish escrow accounts for flood insurance premiums and fees for any loan outstanding or entered into after July 6, 2014, that is secured by residential improved real estate or a mobile home. This provision includes an exemption for certain institutions with less than $1 billion in assets.
Finally, the BWFI Act will change some of the flood insurance Q&As that the Agencies released previously. See the Interagency Statement for more details.
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