On October 31, 2016, the US Federal Reserve Board, the Farm Credit Administration, the FDIC, the National Credit Union Administration and the OCC issued a joint notice of proposed rulemaking to implement provisions of the Biggert-Waters Flood Insurance Reform Act.
Federal flood insurance statutes generally require regulated lending institutions to impose a mandatory purchase requirement for flood insurance in connection with loans secured by improved real property located in areas having special flood hazards. Under the Biggert-Waters Act, regulated lenders must accept, in satisfaction of this requirement, policies issued by private insurers that satisfy the criteria specified in the Biggert-Waters Act, in addition to policies made available by the Federal Emergency Management Agency.
The proposed rule includes provisions to help lenders identify private flood insurance policies they would be required to accept and provides that lenders retain their discretion to accept private flood insurance policies that do not meet the criteria for mandatory acceptance, provided certain conditions are met. Furthermore, the proposed rule would establish criteria to apply in determining that coverage offered by a mutual aid society provides the type of policy or coverage that qualifies as "flood insurance" for purposes of the federal flood insurance laws.
The agencies previously issued a proposal addressing private flood insurance and have decided to issue this second proposal for additional public comment based on comments received in response to the first proposal. Comments are due on or before January 6, 2017.
The proposed rule is available at: https:/www.gpo.gov/fdsys/pkg/FR-2016-11-07/pdf/2016-26411.pdf
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