New Flood Insurance Rule Proposed By Joint Regulators

On October 11, five agencies issued a joint notice of proposed rulemaking to amend regulations related to loans secured by property located in flood hazard areas.  The proposed rule would implement portions of the Biggert-Waters Act with respect to private flood insurance, the escrow of flood insurance payments and the forced-placement of flood insurance if borrowers let their own insurance lapse.  Among other changes, the proposed rule would require lending institutions to accept private flood insurance to satisfy the mandatory purchase requirements and to escrow flood insurance payments and fees for any new or outstanding loans secured by residential improved real estate.  FDIC Release.  Proposed Rule.