Five federal agencies (the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), the Farm Credit Administration (FCA), the Board of Governors of the Federal Reserve System (Board), and the National Credit Union Administration (NCUA)) recently issued the final rule implementing certain provisions of the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA). The rule will make the regulations consistent across the five agencies.
The rule amends the regulations of these five agencies to put into effect changes to the Flood Disaster Protection Act of 1973 that were required by the Biggert-Waters Flood Insurance Reform Act of 2012. Certain parts of the rule will be effective October 1, 2015, while the remainder will take effect January 1, 2016.
The rule requires escrow of flood insurance payments by national banks and federal savings associations for loans which are secured by homes located on land in 100-year flood zones. The rule also allows regulated financial institutions to force-place flood insurance on subject properties and to recover the costs from homeowners. These provisions apply to flood insurance purchased through the National Flood Insurance Program. The agencies intend to issue separate regulations regarding private flood insurance at a later date.