We haven't dealt with this before and just want to make sure we are understanding correctly. We will be transferring a portion of our mortgage loans to a third party for servicing.

22.10(a): Notice Requirement: When a bank makes, increases, extends, renews, sells, or transfers a loan secured by a building in a SFHA, it shall notify FEMA or the Administrator's designee in writing of the identity of the servicer of the loan.

22.10(b): Transfer of Servicing Rights: The bank shall notify the designee of any change in the servicer of a loan described in paragraph (a) of this section within 60 days after the effective date of the change. ...Upon any change in the servicing of a loan described in paragraph (a) of this section, the duty to provide notice under this paragraph (b) shall transfer to the transferee servicer.

I'm reading that we aren't responsible for the Transfer of Servicing Rights Notice, the third party is. But I'm wondering about the first sentence in 22.10(b). In what cases would a bank be responsible for sending that notice? Any help is appreciated.

shall notify FEMA or the Administrator's designee

That would be the insurance company, which normally you would be doing anyway so that they would properly send you the declaration pages.

No, you didn't understand my question. I understand about the designee. I'm asking specifically about the Notice of Transfer 10(b) and who sends it. In our case, with the last sentence, I think the third party sends the notice and not us. But that being said, I'm wondering about the first sentence of part of 10(b). Just for our future knowledge - in what cases would a bank be required to send the Notice of Transfer. We would like an example if possible.

Have you read Section VIII?

https://www.bankersonline.com/sites/default/files/tools/flood_faq_2011_10_17.pdf

Trust me, if you are an OCC bank, you should be sending the notice, not the 3rd party. While the 3rd party will likely contact the insurance company to change the loss payee information, you still have an obligation under this section to provide notice. Our failure to do this and rely on the party purchasing the servicing to provide notice to the insurance company a couple of years ago resulted in an MRA (and was close to a flood civil money penalty).

On a loan that is going to be sold into the secondary market immediately after settlement, where the investor has already committed to purchasing the loan with the serving, is it permissible to skip the bank’s name and information as a mortgagee on the initial policy and use the investor’s name? The Note is in the name of the bank. I can’t find a regulatory cite on this scenario.