Upon reviewing FDIC FIL-32-2015 that came out yesterday,
I am still trying to digest these new flood escrow rules.

Consider these scenarios:

A) Residential Property, Rental Purpose Loan
B) Residential Property, Ag Purpose Loan
C) Residential Property, Home Equity Line of Credit

If I understand correctly, escrow of flood premiums are not mandatory on any of the above properties as of January 1, 2016, correct?

However, I believe the option to escrow flood premiums must be provided only to property C above by June 30, 2016, correct?

If your bank is over $1Billion (and possible for smaller banks) you must escrow flood insurance premiums and fees for consumer loans secured by residential improved real estate or mobile homes that are made, increased, extended or renewed (MIRE) on or after January 1, 2016, unless the loan qualifies for an exemption.

Therefore, A & B are exempt as they are not consumer purpose loans.

HELOC's are exempt under §339.5(a)(iv). The "Option" requirements in §339.5(d)(1)(i) also point back to the same exemptions, so you will not need to provide the option to escrow on HELOC's.

Thanks, David!

What about 2nd lien positions?

What about 2nd lien positions?

Search the final rule using "subordinate" as your search term and you will find the exemption and also will find what you must do if you later find out your subordinate lien is now a first lien.

Just to confirm on HELOCs - does that include 1st lien HELOCs, too? I saw in another thread where it said that 1st lien HELOCs are not exempt and would require escrows - but the logistics would be challenging when a HELOC is interest only and may be at a zero balance such that the only payment due each month would be the flood escrow payment. I didn't see anything in the rule that said 1st lien HELOCs need escrow unless I missed it? Thank you!!

The exception is for home equity lines of credit. No mention of lien position.

I saw in another thread where it said that 1st lien HELOCs are not exempt and would require escrows

If I recall correctly when the proposed rule first came out HELOCs were not specifically exempt and some drew conclusions that 1st lien HELOCS would be covered. The final rule exempted HELOCs.

Our bank has an escrow policy. What about business purpose loans secured by the non-residential real estate? Would these be required to escrow?

No, business purpose loans are exempt from the escrow requirement.

Thanks for clarifying!