In the July 21, 2015, issue of the Federal Register (80 FR 43216, click here), the Federal Reserve Board (FRB), the Farm Credit Administration (FCA), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency (OCC) issued a joint final rule that amends their respective regulations that apply to loans secured by properties located in special flood hazard areas. The joint final rule implements provisions of the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA) relating to the escrowing of flood insurance payments and the exemption of certain detached structures from the mandatory flood insurance purchase requirement. The joint final rule also implements provisions in the Biggert-Waters Flood Insurance Reform Act of 2012 (the Biggert-Waters Act) relating to the force placement of flood insurance. Although the above agencies’ regulations, as amended by the joint final rule, are substantively consistent, the format of the regulatory text varies to conform to each agency’s current regulation. The effective date of each amendment in the joint final rule is disclosed in the amendatory instructions to each agency’s regulations beginning on page 43240 and ending on page 43263 of the above hyperlinked issue of the Federal Register – i.e., the effective date of amendatory instructions 1, 6, 7, 8, 10, 15, 16, 21 and 22 is October 1, 2015, and the effective date of amendatory instructions 2, 3, 4, 5, 9, 11, 12, 13, 14, 17, 18, 19, 20, 23, 24, 25, and 26 is January 1, 2016. Generally, this means that the escrow and option to escrow amendments in the joint final rule, as well as the amendments to Appendix A and the new Appendix B, will become effective on January 1, 2016. All other amendments in the joint final rule will become effective on October 1, 2015. Please be aware, however, that the escrow provisions in the agencies’ regulations in effect on July 5, 2012, the day before the Biggert-Waters Act was enacted, remain in effect, and will be enforced by the agencies, through December 31, 2015, the day before the effective date of the escrow and option to escrow amendments in the joint final rule.
