Flood questions

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  • #5880

    I had a couple of questions after going through the material from last week on Flood issues.

    1. Escrowing – this will go into effect 1/1/16? I also saw 7/6/14 in the materials and got confused.

    2. Escrowing – we escrow for primary residences currently and, if flood insurance is required, we require them to escrow for that as well. After 1/1/16, will we also be required to escrow for commercial dwelling secured loans? Page 30 of the manual shows an exemption for comemrcial credit, but p. 7 doesn’t.

    3. How does the monthly billing option affect us? What if we are escrowing?

    4. If a policy says “NFIP Policy Number” on it, but is issued through Farm Burea or State Farm or another private insurance company does this mean it is actually through the NFIP and we wouldn’t have to do the lengthy comparison Jack was talking about? Our force placed policies don’t have an NFIP policy number but the company’s website says their flood program “follows the NFIP mandatory purchase guidelines”….


    I’ll take a shot at 1 & 2:

    1) This provision was originally set to become effective 7/6/14 but was delayed until 1/1/16 by the Affordability Act.

    2) Page 30 is the inter-agency proposed rule which isn’t effective yet. I think we’ll have to wait to see the final regulation to know for sure whether you will be required to escrow for commercial purpose loans, but I’m guessing that exception makes it to the final rule.

    Jack, can you answer 3 & 4?


    3. If you are escrowing this issue is not a concern. If the customer is purchasing the policy the option for monthly premiums will make it easier for some borrowers to afford the premiums. Many find it easier to make small monthly payments as opposed to a single large annual payment.

    4.The following language appears at the beginning of a standard FEMA dwelling policy: FEDERAL EMERGENCY MANAGEMENT AGENCY

    If this language is missing it appears that you do not have a FEMA policy.

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