Multiple Agencies Seek Comment on Flood Insurance Regulation Changes

by Shannon Allen

The Office of the Comptroller of the Currency (“OCC”), Board of Governors of the Federal Reserve System (“Board”), Federal Deposit Insurance Corporation (“FDIC”), the Farm Credit Administration (“FCA”), and the National Credit Union Administration (“NCUA”) (collectively, the “Agencies”) seek input on proposed amendments to regulations on loans in “areas having special flood hazards” in order to apply provisions of the “Biggert-Waters Flood Insurance Reform Act of 2012.”  In particular, this notice of proposed rulemaking would create requirements regarding the “escrow of flood insurance payments,” the receiving of “private flood insurance coverage,” and the “force-placement of flood insurance.”   In addition, the OCC and the FDIC propose to “integrate their flood insurance regulations . . . .”

Federal flood insurance statutes were revised by the Biggert-Waters Flood Insurance Reform Act of 2012 (the “Act”).  Two sections regarding the “escrow of flood insurance payments” and “acceptance of private flood insurance coverage” changed the Flood Disaster Protection Act (“FDPA”) that require the Agencies to issue implementing regulations.  This proposal revises regulations as follows:

1. this proposal requires regulated lending institutions to escrow premiums and fees for flood insurance for any loans secured by residential improved real estate or a mobile home, unless the institutions qualify for the statutory exception;
2. this proposal mandates regulated lending institutions accept private flood insurance that meets the statutory definition to satisfy the mandatory purchase requirement;
3. this proposal includes new and revised sample notice forms and clauses;
4. this proposal amends the force-placement of flood insurance provisions to clarify that a lender or its servicer has the authority to charge a borrower for the cost of flood insurance coverage commencing on the date on which the borrower's coverage lapsed or became insufficient;
5. this proposal makes technical corrections; and
6. the OCC and the FDIC propose to integrate their flood insurance regulations for national banks and Federal savings associations and for State non-member banks and State savings associations, respectively.

Interested parties are invited to comment specifically on the following:

• whether the proposed collection of information is necessary for the proper performance of the Agencies’ functions; including whether the information has practical utility;
• the accuracy of the Agencies’ estimate of the burden of the proposed information collection, including the cost of compliance;
• ways to enhance the quality, utility, and clarity of the information to be collected; and
• ways to minimize the burden of information collection on respondents, including through the use of automated collection techniques or other forms of information technology.

Comments should be submitted jointly to all of the Agencies, using the title “Loans in Areas Having Special Flood Hazards” by December 10, 2013 in one of the following ways:

• Federal eRulemaking Portal:  http://www.regulations.gov  Enter “Docket ID OCC-2013-0015” in the Search Box and click “Search;”
• Email: regs.comments@occ.treas.gov;
• Mail: Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, 400 7th Street SW., Suite 3E-218, Mail Stop 9W-11, Washington, DC 20219;
• Hand Delivery/Courier: 400 7th Street SW., Suite 3E-218, Mail Stop 9W-11, Washington, DC 20219; OR
• Fax: (571) 465-4326.