The first sentence you referenced addresses when the new insurance limits become effective, while the second is referring to what a creditor must do. My understanding is that the new maximum coverage limits will be available for “Other Residential” properties for new business, renewals or change endorsements on 6-1-14. In other words, the new insurance limits will be available for “other residential” property as of 6-1-14.
We hope to have additional guidance or updated inter-agency flood regulations that addresses exactly what is required of creditors, but in the meantime creditors should be looking at their list of “other residential” properties in a flood zone to determine if additional flood coverage is needed based on the flood insurance calculation (shown below) and considering the new maximum coverage limits. When further guidance is provided creditors will be prepared to begin the force-place process if necessary. Jack’s blog gives a good example of this.
Flood Insurance Calculation:
The amount of insurance must be at least equal to the lesser of :
1) the outstanding principal balance of the designated loan;
2) the maximum limit of coverage available for the particular type of property under the Act; or
3) the overall value of the property securing the designated loan minus the value of the land on which the property is located. (Replacement Cost Value)
Blog Referenced: https://mycomplianceresource.com/jacks-blog/
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