Federal Regulators Issue Revised Interagency Flood Insurance Q&As

Stuck in a flood? Don’t cry – you’ll only make it worse!

A sewer grate surrounded by water that is not high enough to drain, with text: "You had one job..."

Ok, enough flood jokes and on to the good news: the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board (FRB), the Federal Deposit Insurance Corporation (FDIC), the Farm Credit Administration (FCA), and the National Credit Union Administration (NCUA), have issued their revised interagency flood insurance questions and answers!

The new Q&As will replace the previous versions which were published in 2009 and 2011, and cover an extensive range of flood insurance topics. These include the escrow of flood insurance premiums, the exemption for detached structures, the requirement to purchase flood insurance, procedures for force placement of flood insurance, and private flood insurance. The Agencies note that “all the Q&As apply to all policies, whether NFIP or a flood insurance policy issued by a private insurance company, unless otherwise noted in the Q&A.”

The revised Q&As are organized a bit differently than the prior versions; the Agencies sought to “provide a more logical flow of questions through the flood process for lenders, servicers, regulators, and policyholders.” The revised guidance provides a helpful table of contents (beginning on page 8 of the linked PDF file), which lists the new categories of questions, and how previous versions equate to the revised set. Additionally, a redesignation table is provided which outlines where specific questions from the previous versions fall within the revised Q&As (beginning on page 147 of the linked PDF). Each section (I-XIX) has a set of Q&As which start at number 1, instead of continuing the numbering from one section to the next. The actual Q&As begin on page 153 of the linked PDF document, after a good amount of preamble-like background information.

The reorganized categories with the question count for each are as follows:

Section	Category	Short Category	# of Questions
I	Determining the Applicability of Flood Insurance Requirements for Certain Loans	Applicability	15
II	Exemptions From the Mandatory Flood Insurance Purchase Requirements	Exemptions	7
III	Private Flood Insurance – Mandatory Acceptance	Mandatory	9
IV	Private Flood Insurance – Discretionary Acceptance	Discretionary	4
V	Private Flood Insurance – General Compliance	Private Flood Compliance	11
VI	Required Use of Standard Flood Hazard Determination Form	SFHDF	4
VII	Flood Insurance Determination Fees	Fees	2
VIII	Flood Zone Discrepancies	Zone	3
IX	Notice of Special Flood Hazards and Availability of Federal Disaster Relief	Notice	7
X	Determining the Appropriate Amount of Flood Insurance Required	Amount	9
XI	Flood Insurance Requirements for Construction Loans	Construction	6
XII	Flood Insurance Requirements for Residential Condominiums and Co-Ops	Condo and Co-Op	10
XIII	Flood Insurance Requirements for Home Equity Loans, Lines of Credit, Subordinate Liens, and Other Security Interests in Collateral Located in an SFHA	Other Security Interests	12
XIV	Requirement to Escrow Flood Insurance Premiums and Fees - General	Escrow	7
XV	Requirement to Escrow Flood Insurance Premiums and Fees – Small Lender Exception	Escrow Small Lender Exception	7
XVI	Requirement to Escrow Flood Insurance Premiums and Fees – Loan Exceptions	Escrow Loan Exceptions	5
XVII	Force Placement of Flood Insurance	Force Placement	16
XVIII	Flood Insurance Requirements in the Event of the Sale or Transfer of a Designated Loan and/or Its Servicing Rights	Servicing	7
XIX	Mandatory Civil Money Penalties	Penalty	2

Unsurprisingly, the applicability and force placement categories contain the most questions, as those are the more common questions that the Compliance Team receives. Check out the updated guidance here, for more information, and to review the content. For questions regarding this document, you can find contact information for each agency here.

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