We have the small lender exemption until the end of this year. Next year we have to start escrowing for flood.
Let me clarify why you are no longer eligible for the small lender exemption as of the end of the year. Did you grow above $1 billion in 2017? This is from our Flood Insurance training manual:
C. Bank Status Change (Asset Size):
Any bank no longer qualifying for the small bank exemption (asset size) must comply with the requirements to escrow for flood insurance (including optional escrows). In other words, your asset size has exceeded $1 billion for both the prior two calendar year ends.
1. Required Escrows – 6 Month Implementation:
The requirement to escrow will apply to any …loan made, increased, extended, or renewed on or after July 1 of the first calendar year of changed status (i.e. six month implementation)… [§339.5(c)(2)] Refer to the “Mandatory Escrows†section for further details.
2. Optional Escrows Offer – 9 Month Implementation:
The bank must mail or deliver the Escrow Option Notice …to the borrower no later than… September 30 of the first calendar year (i.e. nine month implementation)… that the bank no longer qualifies for the small bank exemption. [§339.5(d)(2)] Unless otherwise exempt (see exceptions), notice must be provided to any loan outstanding as of the date of notification. [§339.5(d)(1)] Refer to the “Mandatory Optional Escrow Offer †section for further details.
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If you exceed $1 billion as of 12/31/17 (and stay above it on 12/31/18), then you have 6 months to implement escrows on flood insurance. IOW, this won't kick in until 7/1/19. You'll also have to notify existing borrowers of the option to escrow, but not until 9/30/19.