Bump for a reply.

Until the regulations are issued setting forth the actual notice requirements - who really knows. It may be combined into the Notice of Special Flood Hazards which does require a signature or proof of delivery.

Do you think this includes condos?

No.

The Federal Reserve published the new CMPs on 12/17. Included is the Biggert-Waters flood CMP increase to $2000. The Rules and Regulations document (link below) shows the amendment took effect on 7/1/2012. Biggert-Waters was signed on 7/6. How will the agencies look at the penalties during an exam? Will they assess the increased amount to loans originated on or after 7/1 or 7/6 or does the increase apply to all loans no matter when they were originated?

https://www.federalregister.gov/articles/2012/12/17/2012-30251/rules-of-practice-and-procedure

Who knows. They don't even assess the full $385 per violation now - so it really is up their discretion. If you don't have any violations - which you shouldn't - it really should be all hypothetical. They can always assess even more under Section 1818, if they so choose.

The OCC's final rule about the inflation adjustment for CMPs had a 12/6/12 effective date. It said that the new CMP amounts would apply to violations that occur on or after the final rule's effective date. http://www.gpo.gov/fdsys/pkg/FR-2012-11-06/pdf/2012-27074.pdf

Thanks for the information. FDIC effective date is 12/31/12, OCC 12/6/12. No wonder we get turned around with dates!

The OCC made a technical correction to their final rule to say that the increased CMPs for flood violations applies to those that occurred on or after July 6, 2012. https://www.federalregister.gov/articles...oceedings-civil

I'm wondering about the mandatory escrow requirement. The requirement is for any mortgage outstanding or entered into after the effective date.

So, does that mean I need to begin flood escrow on some of my existing portfolio mid-term? I'm thinking it might be worth starting that project this year as policies come due.

I would suggest you relax on the escrow thing until regulations are issued:

SEC. 100209. ESCROW OF FLOOD INSURANCE PAYMENTS.

(a) IN GENERAL.—Paragraph (1) of section 102(d) of the Flood
Disaster Protection Act of 1973 (42 U.S.C. 4012a(d)) is amended
to read as follows:

(1) REGULATED LENDING INSTITUTIONS.—

(A) FEDERAL ENTITIES RESPONSIBLE FOR LENDING
REGULATIONS.—Each Federal entity for lending regulation (after consultation and coordination with the Federal Financial Institutions Examination Council) shall, by regulation,direct that all premiums and fees for flood insurance under the National Flood Insurance Act of 1968, for improved real estate or a mobile home, shall be paid to the regulated lending institution or servicer for any loan secured by the improved real estate or mobile home, with the same frequency as payments on the loan are made, for the duration of the loan.

Also, institution with less than $1 billion in assets will be exempt.

OCC Examiners in Kansas are requiring their banks to give the new insurance disclosure (100222)even though this has not been implemented. According to the OCC this was effective July 6, 2012.

Well, good for them. Did they happen to give those banks a copy of the "required" notice?

Of course not.

The other day the ABA's daily newsletter inserted confusion into this matter by not informing the reader that compliance is not yet required. I believe they assumed we all know that. So they simply jumped on the new news that congress had a voice vote to remove "commercial" from the law, but by doing so, they inserted confusion.

YosemiteSamIAm, did you ever receive a copy of the notice on availability of private flood insurance from Chase? Is anyone providing that notice to their customers?

The Senate pased S. 3677 yesterday to clarify that the escrow requirement only impacts residential and not commercial loans.

I recently saw a notice from an Insurance Co. letting one of our borrowers know that their premiums would be increasing do to the loss of subsidies. Are any of you sending a notice from the bank also?

It is not up to the bank to notify customers of increased insurance premiums.

That's what I was thinking. Is there any clarification yet? We aren't 1B yet but are aiming to go in that direction. I'm wondering if it isn't worth just getting things set up to escrow now rather than having to worry about it once we cross the 1B mark.

Wait for the regulations:

‘‘(1) REGULATED LENDING INSTITUTIONS.—
‘‘(A) FEDERAL ENTITIES RESPONSIBLE FOR LENDING
REGULATIONS.—Each Federal entity for lending regulation
(after consultation and coordination with the Federal
Financial Institutions Examination Council) shall, by regulation,
direct that all premiums and fees for flood insurance
under the National Flood Insurance Act of 1968, for
improved real estate or a mobile home, shall be paid to
the regulated lending institution or servicer for any loan
secured by the improved real estate or mobile home, with
the same frequency as payments on the loan are made,
for the duration of the loan.

Came across this on FEMA's site and was also mentioned in a meeting. FEMA has rescinded the NFIP Mandatory Purchase of Flood Insurance Guidelines.

In accordance with FEMA Directive 112-12, any policy document older than three years from the date of issuance must be reviewed for accuracy and updated or rescinded if information is found to be out of date. The current version of the Guidelines contains outdated information and guidance that has been made obsolete by the new legislation, "The Biggert-Waters Flood Insurance Reform Act of 2012".

Therefore, FEMA has decided the best course of action, to prevent confusion on the part of our stakeholders, is to rescind the Guidelines. Lenders should consult their respective regulatory agency for information regarding compliance with the mandatory purchase requirements.

http://www.fema.gov/library/viewRecord.do?id=2954

So now we are at the mercy of interpretive guidance from the field offices......

Thanks. The ABA just updated its staff analysis of the Biggert-Waters Act to reflect this. They also made an update about private flood insurance based on some recent guidance from the GSEs.

Thanks for the info that ABA updated their staff analysis.