OCC Issues Bulletin on Revised Comptroller’s Handbook Booklet
Summary
Note for
The "Flood Disaster Protection Act" booklet applies to the examination of all national banks, federal savings associations, and federal branches and agencies of foreign banks (collectively, banks) subject to the FDPA and the flood insurance regulations codified at 12 CFR 22.
Highlights
Updates to the "Flood Disaster Protection Act" booklet reflect
* the exemption for certain detached structures from the requirement to purchase flood insurance. Under this exemption, a structure that is part of a residential property but is detached from the primary residential structure of the property and does not serve as a residence is not required to be covered by flood insurance. A bank may choose, however, to require flood insurance on the detached structure to protect the collateral securing the mortgage.
* the requirement for a bank, or a servicer acting on its behalf, to escrow premiums and fees for flood insurance for any loan secured by residential improved real estate or a mobile home that is made, increased, extended, or renewed on or after
* the requirement for a bank that is subject to the escrow requirement to offer and make available to borrowers the option to escrow flood insurance premiums and fees for loans that are outstanding as of
* changes to the force placement provision of the FDPA clarifying that a bank, or a servicer acting on its behalf, has authority to charge a borrower for the cost of force-placed flood insurance coverage beginning on the date the borrower-purchased coverage lapsed or became insufficient. In addition, the bank must terminate force-placed insurance coverage within 30 days of receipt of confirmation of a borrower's existing policy and must refund to the borrower all premiums and fees for force-placed insurance paid by the borrower during any period of overlap between the borrower's policy and the force-placed policy.
* examination procedures for determining compliance with the detached structure, escrow, and force placement provisions.
Background
The Biggert-Waters Flood Insurance Reform Act of 2012 and the Homeowner Flood Insurance Affordability Act of 2014 amended the FDPA provisions pertaining to the exemptions from the requirement to purchase flood insurance, the escrowing of flood insurance premiums and fees, and the force placement of flood insurance.
The OCC, the
In addition, the Biggert-Waters Act added to the FDPA a provision mandating the acceptance of a private flood insurance policy meeting certain criteria in satisfaction of the mandatory purchase requirement. The agencies indicated in the 2015 rulemaking that the private insurance provision will be addressed in a separate rulemaking.
Further Information
For further information, contact
Deputy Comptroller for Compliance Risk Policy
Related Link
* "Flood Disaster Protection Act" (PDF) (https://www.occ.gov/publications/publications-by-type/comptrollers-handbook/flood-disaster-protection-act/pub-ch-flood-disaster-protection-act.pdf).
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