Skip to content
BOL Conferences
Learn More - Click Here!

Thread Options
#1800241 - 04/01/13 09:27 PM Escrow required for flood insurance?
WI Banker Offline
Gold Star
Joined: Dec 2006
Posts: 253
I'm wondering if any banks in the Madison area require escrow for flood insurance (even if escrow isn't required for taxes and insurance).

Return to Top
#1800724 - 04/02/13 09:36 PM Re: Escrow required for flood insurance? WI Banker
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,164
Galveston, TX
They will after 7/6/14 as it is a requirement of the Biggert-Waters Act.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#1800788 - 04/03/13 01:12 PM Re: Escrow required for flood insurance? WI Banker
WI Banker Offline
Gold Star
Joined: Dec 2006
Posts: 253
Yes, that is why we've been talking about it. We are under $1 billion (that is the threshold, correct?) but I would still like to do it. A concern that's been brought up is that if competitors aren't requiring it people might go somewhere else for the loan. If all banks are requiring it competition won't be an issue.

Return to Top
#1800957 - 04/03/13 05:09 PM Re: Escrow required for flood insurance? WI Banker
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,394
Wisconsin doesn't have an abundance of flood areas like a coastal state so even tho you could start early, why would you want/need to?
Are you having issues with flood that warrant this type of action?

Return to Top
#1800986 - 04/03/13 05:50 PM Re: Escrow required for flood insurance? WI Banker
WI Banker Offline
Gold Star
Joined: Dec 2006
Posts: 253
I know this isn't a lot to many banks, but we are currently monitoring for flood insurance on about 55 loans. Several of them have multiple policies due multiple structures. Almost all of them were new to flood insurance requirements as part of map revisions in January 2009. The few that are escrowed are so much easier to monitor than the rest of them.

Return to Top
#1801004 - 04/03/13 06:04 PM Re: Escrow required for flood insurance? WI Banker
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,394
So you want to require escrow on EXISTING loans to make it easier to monitor them?
I'm thinking you're not going to get borrowers to sign up for escrow when they didn't have to originally and don't legally have to now.
It is my understanding that the revision effective next July will be for new loans going forward from that date. It won't affect those loans already on a bank's books.

Return to Top
#1801140 - 04/03/13 08:05 PM Re: Escrow required for flood insurance? WI Banker
WI Banker Offline
Gold Star
Joined: Dec 2006
Posts: 253
No, this wouldn't be on existing loans. What I'm talking about are as loans are refinanced and new loans put on the books, putting the requirement in place.

Return to Top
#1801155 - 04/03/13 08:20 PM Re: Escrow required for flood insurance? WI Banker
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,164
Galveston, TX
Go for it - it sure makes it a lot easier to monitor. Regarding the requirement next July, we will have to wait and see. Who knows, they might put a caveat in that says less than a $1B, but if you already do other escrows, you still have to do it, similar to the recent changes.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#1801229 - 04/03/13 09:46 PM Re: Escrow required for flood insurance? WI Banker
#Just Jay Offline
10K Club
#Just Jay
Joined: Oct 2006
Posts: 14,390
Cheeseheadland
I cannot speak for the Madison market (I miss Madtown frown ), but here in the Milwaukee market, our bank has required it for years regardless if you are escrowing for anything else: you have flood insurance, we will escrow it.

Cannot remember a time a customer did not do their loan with us as a result of requiring them to escrow flood. Grumbling, yes, but not a lost loan.
_________________________
I don't repeat gossip, so listen closely...

Return to Top
#1801567 - 04/04/13 06:19 PM Re: Escrow required for flood insurance? WI Banker
WI Banker Offline
Gold Star
Joined: Dec 2006
Posts: 253
Thanks for the discussion and replies! It'll be interesting to see what the final requirements are.

Return to Top