Proposed Changes to Flood Insurance Rules for Financial Institutions
Five federal regulatory agencies, including the National Credit Union Administration, issued a joint notice of proposed rulemaking to change the flood insurance rules.
The October 24, 2014, proposal would require financial institutions to escrow fees and premiums for flood insurance for residential improved real estate loans or mobile homes that are made, increased, extended, or renewed on or after January 1, 2016, unless they fall under a statutory exception.
The proposal would also require financial institutions to provide residential loan borrowers with the option to escrow flood insurance fees and premiums for loans outstanding on January 1, 2016. In addition, it would eliminate the requirement to purchase flood insurance for a structure that is part of a residential property located in a special flood hazard area if that structure is detached from the primary residential structure and does not also serve as a residence.
CLA’s financial institution regulatory compliance team assists banks and credit unions nationwide in establishing regulatory compliance programs, conducting compliance testing, and training staff on regulations. Justin Robinson is a member of CLA’s regulatory compliance team and can be reached at justin.robinson@CLAconnect.com.
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