Revisiting 2015's New Flood Regulations, Part 2

Mortgage Compliance Magazine
9 minute read | February.02.2016

Escrow Provisions

The Final Flood Rule also imposes new requirements related to the escrow of flood insurance premiums and fees. Previously, flood insurance premiums and fees were required to be escrowed if (1) any taxes, insurance premiums, fees, or other charges were required to be escrowed; and (2) the loan was secured by residential improved real estate or a mobile home and made, increased, extended, or renewed on or after October 1, 1996. However, Biggert-Waters and HFIAA directed the Agencies to (1) expand the mandatory escrow requirements to include most closed-end residential loans made, increased, extended, or renewed on or after January 1, 2016, even if no other charges are escrowed; and (2) require non-exempt lenders to provide borrowers with an option to escrow flood insurance premiums and fees for loans that are outstanding as of January 1, 2016, unless an exception applies. The Agencies also implemented notice requirements consistent with these provisions.

Originally published in Mortgage Compliance Magazine; reprinted with permission