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#2023617 - 06/27/15 03:19 PM BW Flood Notice
Compliance Poster Offline
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In reading through the rules, I wasn’t able to determine if a notice/disclosure is required on all residential loans, similar to the one in Your Home Loan Toolkit, regardless if the property is in a special flood hazard area. Would you please help me?

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Flood Compliance
#2023622 - 06/27/15 06:35 PM Re: BW Flood Notice Compliance Poster
rlcarey Offline
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rlcarey
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Galveston, TX
From the final rule:

Moreover, the Agencies concur with commenters’ suggestions to include language in Appendix A similar to the language HFIAA section 13(b) requires to be included in the Special Information Booklet in connection with the exemption from the mandatory flood insurance purchase requirement for certain detached structures. Appendix A, as amended by the Agencies in this final rule, also contains language proposed in the October 2013 Proposed Rule to include the disclosures required by section 102(b)(6) of the FDPA, as added by section 100239 of Biggert-Waters, regarding the availability of private flood insurance coverage and other technical changes.

There is no requirement for individual banks to provide any such notices to individuals who's property is not in a SFHA.
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#2023643 - 06/29/15 11:48 AM Re: BW Flood Notice rlcarey
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Thank you Randy. I missed that.

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#2025376 - 07/06/15 06:01 PM Re: BW Flood Notice Compliance Poster
RobinB Offline
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Joined: May 2005
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Maryland
On a related note, in the new Flood Rules there is specific wording to use to offer borrowers an option for escrowing.

We don't offer an option, we require escrows on all flood premiums. I haven't been able to determine if we need any of this type wording, optional or not--



Appendix B to Part 760—Sample Clause for Option to Escrow for Outstanding Loans
Escrow Option Clause
You have the option to escrow all premiums and fees for the payment on your flood insurance policy that covers any residential building or mobile home that is located in an area with special flood hazards and that secures your loan. If you choose this option:
• Your payments will be deposited in an escrow account to be paid to the flood insurance provider.
• The escrow amount for flood insurance will be added to the regular mortgage payment that you make to your lender or its servicer.
• The payments you make into the escrow account will accumulate over time and the funds will be used to pay your flood insurance policy when your lender or servicer receives a notice from your flood insurance provider that the flood insurance premium is due.
To choose this option, follow the instructions below. If you have any questions about the option, contact [Insert Name of Lender or Servicer] at [Insert Contact Information].
[Insert Instructions for Selecting to Escrow]

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#2025390 - 07/06/15 06:31 PM Re: BW Flood Notice Compliance Poster
rlcarey Offline
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Galveston, TX
If you escrow all loans with flood insurance, then you don't have to worry about offering voluntary escrows.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2025546 - 07/07/15 02:01 PM Re: BW Flood Notice RobinB
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At my bank, we allowed mortgage customers to pay their own taxes if their LTV was low and other criteria was met, we then did not have to escrow for flood. These customers will need to get the new notice if the property is located in an SFHA. Also, we did not require escrow on our first lien closed end credit home equity loans, so we will need to send the notice to any such customers whose properties are located in an SFHA. Our loan documents for home equity loans currently does not address escrow. We will consult with Legal Counsel to see what we need to do to impose a contractual requirement for escrow.
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#2025592 - 07/07/15 03:27 PM Re: BW Flood Notice Compliance Poster
RobinB Offline
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RobinB
Joined: May 2005
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Maryland
Thanks for the input. I think I will just add some wording to another disclosure explaining how escrows work (as in the above sample).

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#2025894 - 07/08/15 03:15 PM Re: BW Flood Notice RobinB
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RobinB
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Maryland
Originally Posted By RobinB
Thanks for the input. I think I will just add some wording to another disclosure explaining how escrows work (as in the above sample).


Aha! I don't even need to do that, found the escrow wording already embedded in another disclosure.

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