Agencies Propose Rule for Loans in Flood Areas

On October 30, 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) issued a proposed rule to amend their regulations regarding loans located in special flood hazard areas to implement certain provisions of the Homeowner Flood Insurance Affordability Act of 2014. Specifically, the proposed rule would establish requirements in connection with the escrow of flood insurance payments;  provide certain borrowers with the option to escrow flood insurance premiums and fees; and eliminate the HFIAA requirement “to purchase flood insurance for a structure that is part of a residential property located in a special flood hazard area if that structure is detached from the primary residential structure and does not also serve as a residence.” Comments on the proposed rule are due by December 29, 2014.

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