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#1860518 - 10/10/13 07:43 PM Escrow of Flood Insurance
Runnin' on Empty Offline
100 Club
Joined: Aug 2002
Posts: 149
We escrow for HPMLs only and our asset size is greater than that of a small creditor.

Are all of our existing consumer loans secured by residential improved real estate going to be required to have flood insurance escrowed when the flood ins. policy is up for renewal, even if the existing loan is not a HPML and nothing else for that loan is required to be escrowed?


Last edited by Runnin' on Empty; 10/10/13 08:16 PM.
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Flood Compliance
#1860824 - 10/11/13 03:13 PM Re: Escrow of Flood Insurance Runnin' on Empty
elcinoca Offline
Platinum Poster
Joined: Jan 2002
Posts: 537
Elizabeth City, NC
Yes. It will apply to new loans as well as those currently on your books -- as of July 6, 2014. From the Joint Notice of Proposed Rulemaking, page 28: "Consistent with section 102(d) of the FDPA, as amended, the proposed provision applies to any loan secured by residential improved real estate or a mobile home that is made or is outstanding on or after July 6, 2014.".

On page 31 of the same proposal, it states: "With respect to designated loans that are outstanding on July 6, 2014, the proposed rule would require regulated lending institutions to begin escrowing with the first loan payment after the first renewal date of the borrower's flood insurance policy that occurs on or after July 6, 2014."

MarkB

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#1868007 - 11/04/13 05:34 PM Re: Escrow of Flood Insurance Runnin' on Empty
JerryB Offline
Junior Member
Joined: Feb 2010
Posts: 26
Crook County
As long as we are the subject of escrows, what about home equity lines of credit? Are they exempt from flood escrow, if that is the only loan?
Last edited by JerryB; 11/04/13 05:57 PM.
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#1868009 - 11/04/13 05:37 PM Re: Escrow of Flood Insurance Runnin' on Empty
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
Under the new proposed rules:

However, if the first lienholder is not required to or otherwise does not escrow flood insurance premiums and fees for adequate insurance coverage for the residential improved real estate or a mobile home, the proposed rule would require the regulated lending institution in the second lienholder position to escrow required flood insurance premiums and fees, unless such regulated lending institution qualifies for an exception from the escrowing provisions.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#1871173 - 11/14/13 06:00 PM Re: Escrow of Flood Insurance rlcarey
Love Cruising Offline
100 Club
Joined: Mar 2009
Posts: 248
We are a small institution under $1 billion, but we currently do escrow for the majority of our residential loans. Since we escrow now, would we need to continue to do so after the proposal becomes effective?

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#1871179 - 11/14/13 06:10 PM Re: Escrow of Flood Insurance Runnin' on Empty
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
a regulated lending institution is not required to escrow if it has total assets of less than $1 billion and, as of the Act’s date of enactment, July 6, 2012, was not required by Federal or State law to escrow taxes or insurance for the term of the loan and did not have a policy to require escrow of taxes and insurance.

Sounds to me like you had a policy to require escrows to me, so you will not qualify under the exemption.

I have always wondered with all the tracking, etc. required for flood insurance, if you have the capability of escrowing, who in their right mind would not want to do it? It sure makes it easier to control.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#1871202 - 11/14/13 06:29 PM Re: Escrow of Flood Insurance rlcarey
Love Cruising Offline
100 Club
Joined: Mar 2009
Posts: 248
I'm all for escrows, I think it eliminates a lot of headaches in the long run. Plus we have some HPML that require escrows.

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