Regulators issue proposed flood insurance rule
NCUA, CFPB, the Federal Reserve Board and other regulators issued a joint notice Friday about a proposed rule for the Biggert-Waters Flood Insurance Reform Act, which includes a requirement that lenders accept private flood insurance under the law.
The Biggert-Waters statute requires lenders to accept private flood insurance to satisfy mandatory purchase requirements for homeowners. The agencies’ proposed rule solicits comment on whether they should adopt additional regulations on the acceptance of flood insurance policies issued by private insurers. In addition, the proposal would require regulated lending institutions to escrow payments and fees for flood insurance for any new or outstanding loans secured by residential improved real estate or a mobile home, not including business, agricultural and commercial loans, unless the institutions qualify for a statutory exception.
FDIC, the Office of the Comptroller of the Currency and the Farm Credit Administration are also on the joint request for comments. The proposed rule would only affect the mandatory flood insurance purchases over which those agencies have jurisdiction.
There will be a public comment period lasting until Dec. 10.
The House passed a continuing resolution at the beginning of the month that ensured programs such as the National Flood Insurance Program and Small Business Administration 7(a) loan program continue through Nov. 18, by which time Congress hopes to complete final appropriations for fiscal 2012.continue reading »