On April 1, 2013 the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the National Credit Union Administration, and the Farm Credit Administration (the Agencies) issued interagency guidance regarding the Flood Disaster Protection Act of 1973 (the FDPA), as amended by the Biggert-Waters Flood Insurance Reform Act of 2012 (the Act). The interagency guidance also provides information regarding the impact of the Act on the Agencies’ proposed Interagency Questions and Answers.
The following provisions of the Act became effective upon enactment:
- Amendments to the force placement provisions of the FDPA.
- The increase of the maximum civil money penalty for an FDPA violation to $2,000 and the elimination of the annual penalty cap.
The following provisions of the Act are not effective until regulations are issued:
- The requirement that lenders accept private flood insurance policies if the coverage satisfies the standards specified in the Act.
- The requirement that lenders disclose to borrowers certain information regarding the National Flood Insurance Program.
- The requirement that certain lenders and servicers establish escrow accounts for flood insurance premiums and fees for any loan outstanding or entered into after July 6, 2014, that is secured by residential improved real estate or a mobile home. This provision includes an exemption for certain institutions with less than $1 billion in assets.
The effective dates of other provisions are not listed.
Impact on Questions and Answers
The Agencies proposed:
- Question and answer 62 to address whether a borrower may be charged for the cost of flood insurance that provides coverage for the 45-day force placement period. Because the Act addresses this issue, proposed question and answer 62 is no longer necessary.
- Revised question and answer 60 and proposed revisions to previously finalized question and answer 57. The Agencies do not intend to finalize proposed questions and answers 57 and 60 at this time. After final regulations have been promulgated, the Agencies expect to undertake a review of the Interagency Questions and Answers and may propose changes as appropriate.
A copy of the guidance is available here.