Flood Insurance Review and Update

The flood insurance regulations have been around since 1996, yet examiners continue to cite numerous violations and order civil money penalties. On June 22, 2015 the Agencies announced a joint final rule implementing certain provisions of the both the Homeowner Flood Insurance Affordability Act and Biggert-Waters Reform Flood Insurance Reform Act. This session begins with a review of the "fundamentals" and an overview of the changes that became effective in October, 2015.

Covered Topics

  • Four fundamentals: 
    1. Overview & Key Requirements
    2. Building an Effective Compliance Management System
    3. Common Violations & Consequences of Noncompliance
    4. Frequently Asked Questions
  • Update – What are the highlights of the NCUA Part 760 rules?
    • Requires institutions to provide borrowers of residential loans outstanding as of January 1, 2016, the option to escrow flood insurance premiums and fees. NOTE: There is a “small lender exception for the mandatory escrow; however there are certain qualifications to be eligible for the exemption.
    • New and revised sample notice forms and clauses concerning the escrow requirement and the option to purchase flood insurance.
    • An exemption from the requirement to purchase flood insurance for a structure that is a part of a residential property if that structure is detached from the primary residence and does not also serve as a residence. One significant clarification: To be eligible for the exemption, the detached structure must be used primarily for “consumer” purposes and cannot be used primarily for commercial or agricultural purposes. 
    • Clarified that regulated lending institutions have the authority to charge a borrower for the cost of force-placed flood insurance coverage beginning on the date on which the borrower's coverage lapses or becomes insufficient. 
    • Stipulates the circumstances under which a lender must terminate force-placed flood insurance coverage and refund payments to a borrower. 
    • One thing not addressed in this final rule was private flood insurance. The Agencies stated that they plan to address this at another time.
  • Flood Insurance Resources – helpful references for NCUA rules and tools for compliance

Who Should Attend?

This informative session is designed for auditors, loan officers, loan assistants, and loan administration staff. This seminar is designed for both those new to flood insurance compliance or more experienced personnel looking for a review of existing requirements.