Flood Insurance:Regulators Issue Guidance to Allow Loan Closings During NFIP Lapse
According to a bulletin just received from Fidelity Property & Casualty Insurance Company:
Three of the nation’s largest lending authorities have issued guidance to administer the federal flood insurance regulations during the current NFIP lapse in authority. Although each lending authority notes considerations, the consensus is, in most cases, loan closings may still occur during the NFIP lapse with verification of the submission of a NFIP flood policy application and premium payment submission to WYO insurance provider. Lenders should follow all normal flood risk evaluations prior to closing and establish follow up practices to monitor full compliance upon the re-authorization of the NFIP program. Lenders should become familiar with and follow the specific guidance offered by their lending authority.
The NFIP issued Memo W-10031 Guidance for Lenders From Their Regulatory Bodies During the Lapse in NFIP Authority publishing guidance from the Office of Thrift Supervision, Federal Reserve Board and Freddie Mac indicating future guidance from other lending regulators would be passed along when made available:
2. Office of Thrift Supervision: http://files.ots.treas.gov/25338.pdf
3. Federal Reserve: http://www.federalreserve.gov/boarddocs/ caletters/2010/1003/caltr1003.htm
As I understand it, if we receive a request from a title company for flood insurance we can issue an application and collect monies showing the intent to purchase flood insurance. Once Congress reconvenes and reauthorizes the program those policies will either be issued retroactively or with current effective date’s dependent on how the reauthorization is approved.
If you have questions we are here to help! This blog will continue to be updated with any new information regarding this topic.
Thank you for your business!