We have a HELOC product which allows the borrower, at some point in time, to "term out" a portion of the outstanding HELOC balance into a HE Loan. If both the HELOC and HE Loan are secured by a first lien on residential real estate and the property is in a flood zone, don't we need to require flood escrowing on the HE Loan? The HE Loan is not an additional borrowing, its balance is deducted from the availability on the HELOC. The available balance on the HELOC would then go back up as the HE Loan is repaid. Right now we are having the borrower sign new documents for the HE Loan, but want to eventually have wording in the HELOC documents addressing this option and no new documents will be signed by the borrower if they decide to "term out" part of the balance. Someone mentioned that this is not a "new plan" so they didn't think escrowing for flood would apply. Flood escrowing is a totally different issue and I don't see any exclusions. Thanks for your help.

Home equity lines are exempt. The fact that you have this subcomponent within the HELOC does not make this a closed-end loan. It is still a part of the HELOC.