Re: Escrow due to Flood Map Revisions


A Flood Hazard Notice and a 45-day notice should have been provided when you initially notified the borrower of the required insurance. Now that you are escrowing you should provide the initial escrow disclosure required by RESPA. Follow your standard procedures regarding escrow requirements. Does your existing note or escrow agreement address required escrows for additional items such as flood insurance? If not, you may want the borrower to sign an escrow agreement for the flood insurance.

There are several ways to handle disclosures when adding an additional item to an existing account. A big factor in the decision is which option is easiest to accomplish in your system. Oftentimes it is easiest to do a short period statement to end the current escrow year, then give a new initial escrow disclosure that includes all items, including the new one.