interagency guidance issued on Biggert Waters..but

Posted By: Burgess

interagency guidance issued on Biggert Waters..but - 03/29/13 01:40 PM

just came out: Interagency Statement on the Impact of Biggert-Waters Act
not for sure what it all means but did note that there is nothing about the multi family limit per bldg to $500,000 even though policies are not yet available.
Posted By: Burgess

Re: interagency guidance issued on Biggert Waters..but - 03/29/13 01:42 PM

didn't do the link correctly: [url=Interagency Statement on the Impact of Biggert-Waters Act ]Interagency Statement on the Impact of Biggert-Waters Act [/url]
Posted By: Reads Regs

Re: interagency guidance issued on Biggert Waters..but - 03/29/13 01:49 PM

Try this link. http://www.fdic.gov/news/news/financial/2013/fil13014.pdf
Posted By: Queen Mum

Re: interagency guidance issued on Biggert Waters..but - 03/29/13 02:08 PM

I still come back to my old question about escrowing for flood. They did build in an exemption if (10 the institution has less than $1 billion in assets; and (2) as of July 6, 2012, the institution was not required by federal or state law to escrow taxes or insurance for the term of the loan, and it did not have a policy to require escrow of taxes and insurance.

Well....we are under the $1 billion in assets but we were required to start escrowing for taxes and insurance in 2012. Under the new Escrow rules, we meet the exemption for not having to escrow come June 1st, but this statement didn't really state that. So my question again is.....even if we are exempt from taxes and insurance are we going to have to start escrowing for flood come 2014? And....if we escrow for flood will we also have to escrow for taxes and insurance - similar to the rule now that if you escrow for taxes and insurance and there is flood you have to escrow for it too?
Posted By: John Burnett

Re: interagency guidance issued on Biggert Waters..but - 03/29/13 02:21 PM

QM: The escrow provision is one that will have to wait for implementing regulations. If the agencies don't answer your question in the proposal for those regulations when it comes out, you'll want to submit a comment explaining the quandary.
Posted By: Doug Hendrickson

Re: interagency guidance issued on Biggert Waters..but - 03/29/13 03:18 PM

Do I interpret that second part of the exemption to the escrow requirement to mean that:

even though we may be under $1 billion in assets and not required by federal or state law to escrow (e.g., not an HPML), that if we have set our own policy that we will escrow for taxes and insurance, that we MUST also escrow for flood?
Posted By: Queen Mum

Re: interagency guidance issued on Biggert Waters..but - 03/29/13 03:30 PM

That's what it sounds like to me. If you had a policy for escrows as required by law beginning in 2012. Which we were if we do HPMLs. They needed to use the new date of June 1 2013. As of that date we are not required by law.
Posted By: Tater

Re: interagency guidance issued on Biggert Waters..but - 03/29/13 03:32 PM

My initial thought at reading that part of the statement is that the HPML rules are not what are being referred to. The key language I'm hanging my hat on there is that the requirement to escrow "FOR THE TERM OF THE LOAN"...HPML rules are clear that the requirement is easy to waive after one year (as of now) or five years (after 6/1/2013).

Or maybe I'm confused at this point.

I'm with the rest of you, though - that's the part that confuses me the most and I guess we'll all wait with baited breath until the actual implementing rules come out. If anyone hears anything, I hope they'll post here.
Posted By: Queen Mum

Re: interagency guidance issued on Biggert Waters..but - 03/29/13 03:34 PM

But we do escrow for the term of the loan unless the customer requests escrow to be dropped. We can't just stop escrowing after one year on our own can we? I thought it had to be requested by the customer.
Posted By: Tater

Re: interagency guidance issued on Biggert Waters..but - 03/29/13 03:36 PM

True...oy vey. It's Friday...my head is spinning already.
Posted By: YHWB

Re: interagency guidance issued on Biggert Waters..but - 03/29/13 03:42 PM

What is the defination of residential improved real estate? are 5+ family structures covered (apartment complexes) by the escrowing provision?
Posted By: Derwood

Re: interagency guidance issued on Biggert Waters..but - 03/29/13 04:02 PM

Originally Posted By: Queen Mum
But we do escrow for the term of the loan unless the customer requests escrow to be dropped. We can't just stop escrowing after one year on our own can we? I thought it had to be requested by the customer.


You could still argue that because the customer can request it be dropped escrow is not required for the term of the loan. I'd like to see this clarified one way or the other.
Posted By: ForceFull1

Re: interagency guidance issued on Biggert Waters..but - 03/29/13 04:39 PM

Jumping topics from escrowing to refunding...

The requirement to refund any force-placed premiums paid if the customer provides evidence he/she has a policy in place is causing some heartburn.

So WE are going to have to eat the cost of these premiums if a borrower doesn't bother to tell us, potentially for months on end, that he/she has another policy in force?

I'm assuming insurers will not be refunding any force-placed premiums paid if we evidence another policy was in place?

We usually add these premiums to the borrower's loan. So we'll have to backdate a reversal for the premiums, or otherwise calculate a refund including interest and apply it to the loan?

So the bank will be eating some costs for customers' negligence, laziness, and/or general stupidity? ::sigh::
Posted By: Deedoubleu

Re: interagency guidance issued on Biggert Waters..but - 03/29/13 07:42 PM

Can we now effective date the force-placed policy back to the date of the lapse or cancellation and charge the premium to the Borrower? So although we still have to give the 45 day notice we can charge the premium for that 45 days?

‘‘purchasing the insurance, including premiums
or fees incurred for coverage beginning on the date on which
flood insurance coverage lapsed or did not provide a sufficient
coverage amount’’;
Posted By: RR Joker

Re: interagency guidance issued on Biggert Waters..but - 03/29/13 08:09 PM

I'm looking for quick clarification on that as well. When we send out the notice to the borrower, it would appear that we can go ahead and force-place, but if the borrower shows proof of coverage, we would refund any overlap.

Is that correct?

I can't imagine that there would be any reason to 'effective date' day 46 for day's prior...that seems pointless.
Posted By: Dan Persfull

Re: interagency guidance issued on Biggert Waters..but - 03/29/13 08:15 PM

Originally Posted By: deedoubleu
Can we now effective date the force-placed policy back to the date of the lapse or cancellation and charge the premium to the Borrower? So although we still have to give the 45 day notice we can charge the premium for that 45 days?

‘‘purchasing the insurance, including premiums
or fees incurred for coverage beginning on the date on which
flood insurance coverage lapsed or did not provide a sufficient
coverage amount’’;


NFIP policies have a 30 day grace period therefore your coverage does not lapse until 30 days after the policy expires.
Posted By: rlcarey

Re: interagency guidance issued on Biggert Waters..but - 03/29/13 09:06 PM


NFIP policies have a 30 day grace period therefore your coverage does not lapse until 30 days after the policy expires.

But flood insurance is never about coverage for the lender. It is all about the borrower. I would say "beginning on the
date on which flood insurance coverage lapsed" is pretty clear.
Posted By: rlcarey

Re: interagency guidance issued on Biggert Waters..but - 03/29/13 09:08 PM

Originally Posted By: ForceFull1
Jumping topics from escrowing to refunding...

The requirement to refund any force-placed premiums paid if the customer provides evidence he/she has a policy in place is causing some heartburn.

So WE are going to have to eat the cost of these premiums if a borrower doesn't bother to tell us, potentially for months on end, that he/she has another policy in force?

I'm assuming insurers will not be refunding any force-placed premiums paid if we evidence another policy was in place?

We usually add these premiums to the borrower's loan. So we'll have to backdate a reversal for the premiums, or otherwise calculate a refund including interest and apply it to the loan?

So the bank will be eating some costs for customers' negligence, laziness, and/or general stupidity? ::sigh::


This has always been the case. Most banks force place flood insurance policies that can be retroactively cancelled and receive a full refund. If you are not using such a company, I would be doing some shopping around.
Posted By: YosemiteSamIAm

Re: interagency guidance issued on Biggert Waters..but - 04/01/13 01:35 PM

I saw the FIL that was released last week and had a question.

This FIL pointed out two things. 1) That certain pieces of the Act became effective upon enactment and 2) the other provisions are not effective until regulations are issued. One of these sections has to do with flood insurance escrow for residential property effective for all outstanding and new loans as of 7-6-14. Have you heard any discussion as to whether this will mean we have to have a fully funded escrow account by that date or if it means that we just will need to have established an escrow account and begin the process of getting it properly funded?
Posted By: RR Joker

Re: interagency guidance issued on Biggert Waters..but - 04/01/13 01:46 PM

Originally Posted By: RR Joker
I'm looking for quick clarification on that as well. When we send out the notice to the borrower, it would appear that we can go ahead and force-place, but if the borrower shows proof of coverage, we would refund any overlap.

Is that correct?

I can't imagine that there would be any reason to 'effective date' day 46 for day's prior...that seems pointless.


any comments? (but with a tweak for clarity).

Policy expires. You should have 30 days before it lapses. 30 days in to the 45 day notice, you can go ahead and FP at that time, preventing 15 days of non-coverage...correct?
Posted By: Dan Persfull

Re: interagency guidance issued on Biggert Waters..but - 04/01/13 06:14 PM

But flood insurance is never about coverage for the lender. It is all about the borrower. I would say "beginning on the
date on which flood insurance coverage lapsed" is pretty clear.


Based on what I can find in my search of FEMA's Web site I have to stand by my opinion the borrower's policy/coverage does not lapse until after the 30 day grace period:

http://www.fema.gov/pdf/nfip/manual201205/content/12_policyrenewal.pdf

III. PREMIUM PAYMENT DUE
To ensure that the policy is renewed without a lapse
in coverage, the premium must be received by the
insurer within 30 days after the expiration date.

http://www.floodsmart.gov/floodsmart/pag...has-expired.jsp

Is there a 'grace period' after a policy has expired?
All policies expire at 12:01 a.m. on the last day of the effective term, but you remain covered for 30 days after the expiration of the policy. Claims for losses that occur in this grace period will be honored, provided that the full renewal premium is paid by the end of the 30-day period.


Posted By: rlcarey

Re: interagency guidance issued on Biggert Waters..but - 04/02/13 01:48 AM

But you don't know that they renewed their policy. If they don't pay the premium within 30 days, they have no coverage and there is no 30 grace period. If they renew, you will receive a declaration page backdated to the original expiration date and you would just cancel your force placed policy. If you don't have a ability to retroactively cancel policies, then you might wait. If you do, why would you choose to do so?

Like everything they try to do with regulations, whatever they do does leave more unanswered questions.
Posted By: RR Joker

Re: interagency guidance issued on Biggert Waters..but - 04/02/13 12:39 PM

Okay...gee whiz...this should not be this confusing!

You still send out the 45 day letter, but you can go ahead and place insurance at the end of the 'grace period' if payment hasn't been made (to your knowledge) and charge for that time period if proof of insurance is not given.

Currently, our letter says we will insure it for you if we haven't received insurance within 45 days...I'm wondering if this needs to be re-worded to notify them that we will place it upon expiration/lapse of their policy.

I still just don't see where 'effective dating' insurance back to day 30 on day 46 makes any sense to me at all.

Am I over-thinking this rule change? crazy
Posted By: rlcarey

Re: interagency guidance issued on Biggert Waters..but - 04/02/13 12:56 PM

I still just don't see where 'effective dating' insurance back to day 30 on day 46 makes any sense to me at all.

I agree with that statement, but you could force place on day one and then cancel if you received proof of insurance. If you don't get proof, you could charge the borrower for the policy on day 46. Or you can just continue to do what you have been doing, it is your option. All the new rules did was clarify that you can charge for policy coverage obtained within the first 45 days.
Posted By: Dan Persfull

Re: interagency guidance issued on Biggert Waters..but - 04/02/13 01:05 PM

My point is the policy/coverage does not lapse as long as the premium is paid within the 30 day grace period. If paid the current policy continues with no waiting period. If they do not pay the premium within the 30 day grace period the policy lapses; and in that case to continue coverage they would have to purchase a new policy and the 30 day waiting period would kick in.

There is a difference between expiration and lapsation. There is a contract between the insured and the insurer. The insured agrees to pay premiums and the insurer agrees to pay claims while the policy is in effect. The contract, most all insurance policies I've seen, gives the insured a grace period to pay the agreed upon premium. The insurer agrees not to let the policy lapse/terminate and pay all claims during the grace period provided the premium is paid within the allotted time. If I have a claim on day 3 of the grace period and as long as I pay the premium on or before day 30 my coverage will not lapse and my claim will be paid. If I do not pay on day 30 then my coverage will lapse/terminate and the claim will not be paid.

The Interagency Guidelines specifically references the date when the policy lapses not when it expires. Based on that reference and wording I do not believe the guidelines gives you the authority to charge the borrower back to the expiration date of the policy. You can only charge back to the date the coverage lapses and that is day 31 after the expiration date if no payment has been received by the insurer.

Now with all that said your regulator is the one that will interpret and examine the rule so if you have doubts you need to consult with them, get the opinion in writing if you can and follow their guidance.
Posted By: RR Joker

Re: interagency guidance issued on Biggert Waters..but - 04/02/13 01:08 PM

Thanks Randy..I know I'm overthinking this...it's the letter, or re-working of the letter and procedures that's twisting me up somehow...trying to make it make sense! cry
Posted By: RR Joker

Re: interagency guidance issued on Biggert Waters..but - 04/02/13 01:13 PM

Dan, I agree with your analogy of when the policy lapses, and it's been a long-standing issue that we have had 15 days of gap with the way the old rules were written.

Before we had to wait until day 46 to FP. Now, we could FP on day 30, but not add the premium to the loan until day 46, and refund if proof is otherwise given.

May be more trouble than it's worth, actually!
Posted By: YosemiteSamIAm

Re: interagency guidance issued on Biggert Waters..but - 04/02/13 02:58 PM

O.K., now that that is settled, I'm resubmitting this question for consideration please:

I saw the FIL that was released last week and had a question.

This FIL pointed out two things. 1) That certain pieces of the Act became effective upon enactment and 2) the other provisions are not effective until regulations are issued. One of these sections has to do with flood insurance escrow for residential property effective for all outstanding and new loans as of 7-6-14. Have you heard any discussion as to whether this will mean we have to have a fully funded escrow account by that date or if it means that we just will need to have established an escrow account and begin the process of getting it properly funded?
Posted By: RR Joker

Re: interagency guidance issued on Biggert Waters..but - 04/02/13 03:03 PM

Yo, I don't think your question can really be answered until they put that part into regulation.
Posted By: YosemiteSamIAm

Re: interagency guidance issued on Biggert Waters..but - 04/02/13 05:08 PM

Understood RR, I was just wondering if there was any industry or regulator "buzz" out there? grin
Posted By: rlcarey

Re: interagency guidance issued on Biggert Waters..but - 04/02/13 05:15 PM

However it works out, it is not going to force an escrow on a borrower that doesn't already have one. So, from that perspective, it will be on a go forward basis. If they already have an escrow, flood has to already be included.
Posted By: John Burnett

Re: interagency guidance issued on Biggert Waters..but - 04/02/13 08:09 PM

Well the wording of the B-W provision in section 100209(b) indicates it will apply to all mortgage loans requiring flood insurance that are outstanding on, or entered into on or after [July 6, 2014]. I know that regulators are trying to get some parts of B-W clarified (there's more wrong than Congress patched up with the amendment restricting escrow to non-business loans). I wonder whether they'll ask for the "outstanding on" language to be removed, regulate an exception to it, or make servicers add the escrow for those who don't already have it.
Posted By: ahkcompliance

Re: interagency guidance issued on Biggert Waters..but - 04/03/13 08:05 PM

So if we have a customer on July 6, 2014 who has an escrow set up for taxes and insurance and also has flood insurance. The flood insurance is paid annually by the borrower and is not included in the escrow. Will the flood ins need to be included in the escrow account?
Posted By: RR Joker

Re: interagency guidance issued on Biggert Waters..but - 04/03/13 08:07 PM

It's already required to be escrowed if you escrow for anything else.
Posted By: ahkcompliance

Re: interagency guidance issued on Biggert Waters..but - 04/03/13 08:20 PM

That is what I thought.

I have discovered two loans that have escrow for taxes but NOT flood insurance. One loan was done in 2005 and the other in 2010. Do we have to go back and escrow for flood?
Posted By: zitch70

Re: interagency guidance issued on Biggert Waters..but - 04/04/13 04:18 PM

We just had a customer present us with 4 years worth of flood insurance and wants a refund of the 4 years of forced place insurance premiums that we added to the loan. Does this go retroactive or just current policy period? Plus we will verify with ins company that the customer did not just get a policy then drop coverage and keep the Declarations page.
Posted By: rlcarey

Re: interagency guidance issued on Biggert Waters..but - 04/04/13 04:47 PM

Current policy - sure. Policies paid for and already expired - ask them where were they four years ago when you were sending them force place notices and copies of force placed policies. They are a little late to the game in my book.
Posted By: Ucan'tdothat

Re: interagency guidance issued on Biggert Waters..but - 04/09/13 02:15 PM

Some years ago we had a big issue during an exam because when we force placed, we retroactively applied the coverage to the date of expiration of the previous coverage and charged the borrower. The OCC said that we could force place but could not charge the customer for the 45 days. We changed our procedures and now forceplace on the 46th day. The bank bought gap insurance to protect itself for the first 45 days.

My question is that the new guidance says we MAY charge now beginning on the date the existing coverage but this does not mean we MUST do it. Correct? I think we can just continue to do what I describe above?
Posted By: rlcarey

Re: interagency guidance issued on Biggert Waters..but - 04/09/13 02:27 PM

I think we can just continue to do what I describe above?

Yes you can.
Posted By: Cale_N_Oats

Re: interagency guidance issued on Biggert Waters..but - 04/09/13 07:02 PM

Our Senior Lending Officer just came from a conference held by the FDIC during which the speaker, who is an examiner, stated that the 45 day rule no longer applies and thatwe are able to force place and charge our customers after the 30 day grace period. I have read through the above comments and don't see that interpretation in any of them, so i just wanted to ask can we force place and charge the customers or do we still have to wait 45 days before they are charged?
Posted By: rlcarey

Re: interagency guidance issued on Biggert Waters..but - 04/09/13 07:13 PM

I think this was fully discussed in this post - did you go to the beginning - there are more than one page of posts.
Posted By: Cale_N_Oats

Re: interagency guidance issued on Biggert Waters..but - 04/09/13 08:03 PM

Yeah I read all the pages. The examiner I mentioned in my first post says after 30 days you can force place and charge the customer for the full amount same day. I guess I am confused as to whether you can charge them for only the 15 days of lapsed coverage or for the full amount of the insurance?
Posted By: rlcarey

Re: interagency guidance issued on Biggert Waters..but - 04/09/13 08:06 PM

That is the discussion that Dan and I were having. Dan indicated that the bank was covered for 30 days after expiration (different than if the borrower canceled their policy) and he thought you could force place and charge from day 31. I think that you might be able to go back to day one, but I guess we will wait to see if there clarified from other than some examiner in a seminar. Going back to day 31 is a safe bet in either case under the new law and interpretations.
Posted By: RR Joker

Re: interagency guidance issued on Biggert Waters..but - 04/09/13 08:11 PM

If I'm understanding Cale's question correctly, he's asking if you can go ahead and charge on day 31. My understanding is you can make the insurance effective beginning day 31, but you can't apply it to the balance until day 46.
Posted By: rlcarey

Re: interagency guidance issued on Biggert Waters..but - 04/09/13 08:15 PM

Oh - OK. That would then seem to be the case. Sorry - either not enough or tooo much coffee - not sure which it is smile All I know is that it is rapidly approaching martini hour.
Posted By: RR Joker

Re: interagency guidance issued on Biggert Waters..but - 04/09/13 08:17 PM

I hear ya!
Posted By: Cale_N_Oats

Re: interagency guidance issued on Biggert Waters..but - 04/09/13 08:27 PM

Sorry for the confusion. Yes, RR that is what I was trying to get clarification on because the guidance mentions charging the customer "fees" and "premiums", but was confused on when it could be applied. Thanks to you both!
Posted By: Queen Mum

Re: interagency guidance issued on Biggert Waters..but - 04/09/13 08:37 PM

But didn't it also say that if they supplied you with evidence of insurance within 30 days then you couldn't charge them anything but if they didn't get insurance in the first 30 days that you could?
Posted By: Cale_N_Oats

Re: interagency guidance issued on Biggert Waters..but - 04/09/13 08:47 PM

That is what I was thinking too QM.......
Posted By: rlcarey

Re: interagency guidance issued on Biggert Waters..but - 04/09/13 09:18 PM

What they said was:

Require the lender or servicer, within 30 days of receiving a confirmation of a borrower’s existing flood insurance coverage, to terminate any force-placed insurance and refund to the borrower all force-placed insurance premiums and any related fees paid for by the borrower during any period of overlap between the borrower’s policy and the force-placed policy.

That should be no different than what is happening now. You can't double insure the borrower.

Many banks use force placed insurance which allows them to retroactively cancel insurance back to the date that the borrower coverage started and receive an appropriately prorated refund.
Posted By: RR Joker

Re: interagency guidance issued on Biggert Waters..but - 04/10/13 01:39 PM

AGree...nothing changed other than you can now cover that 15-day gap and charge for that period...that's really all there is to it.
Posted By: LFTbanker

Re: interagency guidance issued on Biggert Waters..but - 04/10/13 02:47 PM

Just a bit of an update. According to the OCC's compliance specialist out of Dallas speaking to a compliance round table, the change means that you may force place on day one if your contract allows you to purchase insurance if the borrower does not maintain it (not very tight on the language required in the contract). They are taking the stance that this is permissive and you can also choose the 31st day or the 46th day, your choice, just be consistent and mind the refund requirement. Just an FYI.
Posted By: RR Joker

Re: interagency guidance issued on Biggert Waters..but - 04/10/13 02:54 PM

I think they are missing the point. Insurance just flat doesn't lapse until 30 days past due and the rules use the word 'lapse'. At any rate...did he say anything about not charging the account until day 46, or did he skirt that issue entirely?
Posted By: rlcarey

Re: interagency guidance issued on Biggert Waters..but - 04/10/13 03:05 PM

There are multiple situations here that may dictate a different approach. If a customer cancels their flood insurance, or changes their insurance amount, the insurance lapses on the date of cancelation or may be inadequate on the date of renewal.

Unless the borrower pays their current premium within 30 days of policy expiration, the insurance lapses as of the original expiration date. While the bank may be covered for 30 days, the insured is not and we all know that flood insurance is about the borrower and not the bank.

If you use force placed insurance that allows retroactive cancelations, I don't see it as really that much of an issue as to when you decide to begin the coverage as the OCC indicated.

If you don't then I probably would be sticking with the 46 day timeframe, as if the borrower provides you proof of insurance after the fact, that is going to be 45 days of premium that the bank is not going to have to eat.

Since we now seem to have two different opinions from two different regulators (not to mention Dan and I smile ), I think the agencies may re-open the Q&As that they indicated were dead in the interagency release to provide further clarification.
Posted By: LFTbanker

Re: interagency guidance issued on Biggert Waters..but - 04/10/13 03:13 PM

She didn't really address when to charge the customer (short forum). I think they are basing their interpretation of "lapse" on the fact that if the full premium isn't paid within the 30 days after expiration, then the lapse is as of 12:01 of the last day of coverage as claims arising in that 30 days would not be covered for the mortgagor.

I would just add that each of the points that Randy makes was addressed including when you force place being influenced by the refund policies of your force place vendor and the level of headache that will create. The gist was that this will just give lenders more options.
Posted By: RR Joker

Re: interagency guidance issued on Biggert Waters..but - 04/10/13 03:31 PM

Yes...it's good to have a positive thing for once! wink
Posted By: Dan Persfull

Re: interagency guidance issued on Biggert Waters..but - 04/10/13 04:34 PM

If a customer cancels their flood insurance, or changes their insurance amount, the insurance lapses on the date of cancelation or may be inadequate on the date of renewal.

In those situations then I would agree you can charge back to the date that caused the insurance to lapse or causes the proper coverage requirement to be inadequate.

My contention is when the annual premium comes due and not paid by the borrower and you start your force place procedure. In that situation it is still my opinion you cannot charge for or force place coverage until day 31.
Posted By: ahou

Re: interagency guidance issued on Biggert Waters..but - 04/15/13 03:48 PM

When you force place and add the prem amt to the prin bal of the loan, do you have to obtain flood at the new prin bal? (that includes the force placed prem) Does this trigger a flood notice?
Posted By: rlcarey

Re: interagency guidance issued on Biggert Waters..but - 04/15/13 03:57 PM

do you have to obtain flood at the new prin bal? (that includes the force placed prem)

Yes

Does this trigger a flood notice?

No - you are not technically increasing the loan.
Posted By: ahkcompliance

Re: interagency guidance issued on Biggert Waters..but - 04/17/13 07:03 PM

I think we have decided we will just continue our current practice of force placing and charging on day 46. Nothing says we have to force place on day 31 is there? We've only had to force place once in the last two years.
Posted By: RR Joker

Re: interagency guidance issued on Biggert Waters..but - 04/17/13 07:10 PM

Correct, you don't have to...they are just allowing coverage for and charging for during the gap.
Posted By: Bullseye

Re: interagency guidance issued on Biggert Waters..but - 04/17/13 08:28 PM

Originally Posted By: RR Joker

Before we had to wait until day 46 to FP. Now, we could FP on day 30, but not add the premium to the loan until day 46, and refund if proof is otherwise given.


Question - The FIL on 3/29/13 says "the Act amends FDPA to provide that the premiums and fees that a lender may charge the borrower include premiums or fees incurred for coverage beginning on the date on which flood insurance coverage lapsed..."

So if we can force place effective on day 31, why do we have to wait until day 46 to charge? That part has me confused.
Posted By: RR Joker

Re: interagency guidance issued on Biggert Waters..but - 04/18/13 12:44 PM

If memory serves me, they didn't change when they could be charged...just that they could be charged for coverage prior to day 46. It's not clear really, and I agree, it's confusing. But when is government lingo ever NOT? laugh

To be honest, I haven't thought too deeply about it because our billings come in quite a bit after that time frame, so it was a non-issue. But, it seems the general concensus on here that charging sooner wasn't specified. Perhaps they will clarify it better when they actually put it in regulatory writing?
Posted By: Cale_N_Oats

Re: interagency guidance issued on Biggert Waters..but - 04/18/13 01:14 PM

I received an email back from John Jackwood, who is the contact at the FDIC listed on the FIL. He stated that "the lender or servicer may charge the borrower for force placed insurance premiums and fees incurred by the lender or servicer for coverage beginning on the date on which the flood insurance coverage lapsed". He also stated that It was up to the bank to decide on how to charge the borrower (applied to loan, mailed bill, etc.) Hope this helps.
Posted By: rlcarey

Re: interagency guidance issued on Biggert Waters..but - 04/18/13 01:57 PM

Wow - that's great. He repeated the FIL to you. I also e-mailed him and asked what they mean by "lapsed" - policy expiration date or 30 days later when the mortgagee's coverage ends on a policy that is not renewed. If have yet to hear back from him. He also didn't answer the question as to when the charge can be applied.

Nice helpful e-mail.
Posted By: Bullseye

Re: interagency guidance issued on Biggert Waters..but - 04/18/13 05:43 PM

Originally Posted By: RR Joker
If memory serves me, they didn't change when they could be charged...just that they could be charged for coverage prior to day 46. It's not clear really, and I agree, it's confusing. But when is government lingo ever NOT? laugh

To be honest, I haven't thought too deeply about it because our billings come in quite a bit after that time frame, so it was a non-issue. But, it seems the general concensus on here that charging sooner wasn't specified. Perhaps they will clarify it better when they actually put it in regulatory writing?



Thanks Joker. That makes a little sense I guess. They didn't change WHEN you could charge, just WHAT you could charge for. Of course it's never simple...
Posted By: Red Raiders

Re: interagency guidance issued on Biggert Waters..but - 01/31/14 04:50 PM

Just to summarize, if we send a 45 day letter out at expiration or upon learning of a map change we can:

1. Force place on day 46 and charge borrower for day 46 going forward
2. Force place on day 31 and charge borrower on day 46 (charging from day 31)
3. Force place on day 1 and charge borrower on day 46 (charging from day 1)

Are all acceptable?
Posted By: RR Joker

Re: interagency guidance issued on Biggert Waters..but - 01/31/14 06:36 PM

Yes. So long as there are no overlaps, or if you learn of overlap later, you refund.
Posted By: Red Raiders

Re: interagency guidance issued on Biggert Waters..but - 01/31/14 07:27 PM

Got it!

Thanks for the response.
Posted By: RR Joker

Re: interagency guidance issued on Biggert Waters..but - 11/07/14 09:28 PM

Have there been any new interpretations on 'expired' vs. 'lapsed' on this subject. I noticed David's download on this subject appears to interpret it differently.

The Biggert-Waters Flood Insurance Reform Act provides that a lender may
charge borrowers for fees and premiums associated with the force-placement of
flood insurance coverage from the date that the borrower’s flood insurance was
no longer in effect or inadequate. For example, let’s say your borrower’s
coverage expires March 31st and your force-placement notification is sent April
1st. Hopefully, you can align the borrowers’ 30-day grace period with the 30-day
waiting period for any force-placed policy. Then, while you must allow the
borrower 45 days to obtain flood insurance coverage, on May 16th, you may
charge the borrower for any fees and premiums incurred for coverage since April
1st
if the borrower did not have adequate coverage. Any fees and/or premiums
for overlapping coverage, however, must be refunded within 30 days of
confirmation (such as a declarations page) of the borrower’s coverage. Any
force-placed insurance must also be cancelled within 30 days of confirmation of
the borrower having obtained adequate flood insurance coverage.
Posted By: RR Joker

Re: interagency guidance issued on Biggert Waters..but - 11/12/14 03:08 PM

Bump