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Highlights:
The proposed rule would:
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Require
regulated lending institutions to accept private flood insurance to satisfy
the mandatory purchase of flood insurance requirement if the private flood
insurance meets the statutory definition of the term “private flood
insurance” as well as the terms and coverage amount required under the
Flood Disaster Protection Act.
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Require
institutions to disclose the availability of flood insurance from private
flood insurance companies, and encourage borrowers to compare flood
insurance policies offered under the National Flood Insurance Program with
policies offered by private insurance companies.
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Require
regulated lending institutions to escrow premiums and fees for flood
insurance for any residential loans secured by residential improved real
estate or a mobile home with the same frequency as regular payments made on
the loan. The proposal specifies when lenders must begin escrowing, and
requires lenders to give borrowers 90 days written notice before escrowing
for outstanding loans. The proposed rule includes an exemption for certain
smaller lenders, as well as for business, commercial and agricultural loans,
second lien loans, and residential condominium association policies.
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Clarify that
a lending institution may charge a borrower for force-placed insurance
coverage commencing on the date a borrower’s flood insurance policy
lapses or does not provide sufficient coverage. The proposed rule would
require an institution to terminate a force-placed insurance policy, and
refund any payments a borrower made for overlapping coverage within 30 days
of the borrower presenting evidence of flood insurance coverage.
Distribution:
FDIC-Supervised
Institutions
Suggested Routing:
Chief Executive Officer
Chief Compliance Officer
Chief Loan Officer
Related
Topics:
Biggert-Waters Flood Insurance Reform Act of 2012
Flood Disaster Protection Act of 1973
Attachment:
Joint Notice of
Proposed Rulemaking
Contact:
John Jackwood, Senior Policy Analyst, at (202) 898-3991 or JJackwood@FDIC.gov;
Navid Choudhury, Senior Attorney, at (202) 898-6526 or NChoudhury@fdic.gov
Note:
FDIC Financial Institution Letters (FILs) may be accessed from the FDIC's Web
site at www.fdic.gov/news/news/financial/2013/index.html.
To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html.
Paper copies may be obtained through the FDIC's Public Information Center, 3501
Fairfax Drive, E-1002, Arlington, VA 22226 (877-275-3342 or 703-562-2200).
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