WASHINGTON (4/1/13)--The National Credit Union Administration, along with bank and farm credit agencies, put out guidance to address any confusion that might be surrounding effective dates in the Biggert-Waters Flood Insurance Reform Act of 2012.
That act amended the Flood Disaster Protection Act of 1973 and a couple of its provisions were effective immediately upon enactment. They were:
* Amended force-placed insurance provisions (see resource link for details); and
* An increase in the maximum civil money penalty for an FDPA violation to $2,000, and removal of an annual penalty cap.
However, the joint agency guidance clarifies, there is a longer list of provisions that will not go into effect until their implementing regulations are drafted, discussed and made final. These changes include requirements that:
* Lenders accept private flood insurance policies if the coverage meets the Act's standards;
* Lenders disclose to borrowers certain information regarding the National Flood Insurance Program; and
* Certain lenders and servicers establish certain escrow accounts for flood insurance premiums and fees for loans (outstanding or entered into after July 6, 2014) secured by residential improved real estate or a mobile home.
Some financial institutions with less than $1 billion in assets will be exempt from the above escrow requirement.
The agencies intend to publish escrow regulations in sufficient time for the industry to implement them prior to July 2014, the guidance noted.
The Credit Union National Association will provide more information and a summary of all new rules to credit unions when they are available. Watch CUNA's News Now.
The guidance was issued by NCUA, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, the Federal Reserve Board, and the Farm Credit Administration.