{"id":2296,"date":"2020-12-14T15:32:49","date_gmt":"2020-12-14T15:32:49","guid":{"rendered":"https:\/\/albanknews.com\/?p=2296"},"modified":"2020-12-14T15:32:49","modified_gmt":"2020-12-14T15:32:49","slug":"fha-posts-proposed-rule-permitting-acceptance-of-private-flood-insurance","status":"publish","type":"post","link":"https:\/\/albanknews.com\/?p=2296","title":{"rendered":"FHA Posts Proposed Rule Permitting Acceptance of Private Flood Insurance"},"content":{"rendered":"<p class=\"p1\"><i>By <a href=\"https:\/\/www.bradley.com\/people\/w\/wright-heather-howell\">Heather Howell Wright<\/a> and <a href=\"https:\/\/www.bradley.com\/people\/h\/holland-austin\">Austin Holland<\/a><\/i><\/p>\n<p class=\"p3\"><span class=\"s1\">On Nov. 23, the U.S. Department of Housing and Urban Development (HUD)<span class=\"Apple-converted-space\">\u00a0 <\/span>published in the Federal Register a proposed amendment to Federal Housing Administration (FHA) regulations that would allow lenders to accept private flood insurance policies on FHA-insured properties located in Special Flood Hazard Areas. HUD will accept comments for 60 days following the date the proposed rule, Acceptance of Private Flood Insurance for Federal Housing Administration (FHA)-Insured Mortgages (Docket No. FR-6084-P-01), is published.\u00a0<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">The proposed rule would allow borrowers the option of purchasing private flood insurance on FHA-insured mortgages for properties located in Special Flood Hazard Areas by amending FHA regulations at 24 CFR sections 201, 203, and 206 as follows:<\/span><\/p>\n<ul>\n<li class=\"p3\"><span class=\"s1\">24 CFR \u00a7 204.16a would be amended to include the definition of \u201cprivate flood insurance\u201d from the Biggert-Waters Flood Insurance Reform Act.<\/span><\/li>\n<li class=\"p3\"><span class=\"s1\">24 CFR \u00a7 203.15a would be amended to include a \u201ccompliance aid\u201d provision allowing mortgagees to accept private policies, without further review, where the policy contains the language:<span class=\"Apple-converted-space\">\u00a0 <\/span>\u201cThis policy meets the definition of private flood insurance contained in 24 CFR 203.16a(e) for FHA-insured mortgages.\u201d<\/span><\/li>\n<li class=\"p3\"><span class=\"s1\">HUD also proposes to amend 24 CFR \u00a7 201.28(a) (Property Improvement and Manufactured Home Loans), \u00a7 203.343(b) (Single Family Mortgage Insurance), \u00a7 206.45(c) (Home Equity Conversion Mortgage Insurance), and \u00a7 206.134(b) (Home Equity Conversion Mortgage Insurance) to permit borrowers to obtain private flood insurance. <\/span><\/li>\n<\/ul>\n<p class=\"p1\"><span class=\"s1\">The proposed rule announcement provides an explanation of the history of the Flood Disaster Protection Act of 1973 (the FDPA), as amended by the National Flood Insurance Reform Act of 1994, and the Biggert-Waters Flood Insurance Reform Act of 2012 (Biggert-Waters). HUD\u2019s authorization that lenders may accept private flood insurance policies comes nearly two years after the Board of Governors of the Federal Reserve System, the Farm Credit Administration, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency (the interagency regulators) issued a final rule in February 2019 implementing the portion of Biggert-Waters mandating acceptance of private flood insurance. While the interagency regulators\u2019 final rule requires federally regulated lenders to accept private flood insurance went into effect on July 1, 2019, FHA\u2019s existing rules do not permit private flood insurance to satisfy the mandatory purchase requirement of the FDPA.<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">Importantly, HUD advised in the proposed rule that it \u201cwill not permit Mortgagees to exercise their discretion to accept flood insurance policies, provided by private insurers or mutual aid societies, that do not meet the definition and requirements for a private flood insurance policy as laid out in this rule.\u201d As a result, HUD cautioned that \u201c[d]ue to the differences between HUD and the Federal regulators\u2019 rules, compliance with the Federal regulators\u2019 Final Rule should not be interpreted as compliance with HUD\u2019s requirements.\u201d Given this significant and explicit distinction by HUD, federally regulated lenders that originate FHA-insured loans should be mindful that their policies and procedures are designed to ensure compliance with both the interagency regulators\u2019 Final Rule and HUD\u2019s eventual final rule on the topic of acceptance of private flood insurance. <\/span><\/p>\n<p class=\"p4\"><span class=\"s1\"><i><a href=\"https:\/\/www.bradley.com\/people\/w\/wright-heather-howell\">Heather Howell Wright<\/a> is a partner at Bradley. She helps financial institutions identify operational risks and determine business solutions to mitigate those risks. <a href=\"https:\/\/www.bradley.com\/people\/h\/holland-austin\">Austin Holland<\/a> is also an associate at Bradley. His practice focuses on regulatory compliance matters, government enforcement actions, and financial services litigation. He has represented clients in a variety of matters, but his practice is particularly focused on issues with an emphasis on matters related to housing.<\/i><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Heather Howell Wright and Austin Holland On Nov. 23, the U.S. Department of Housing and Urban Development (HUD)\u00a0 published in the Federal Register a proposed amendment to Federal Housing Administration (FHA) regulations that would allow lenders to accept private flood insurance policies on FHA-insured properties located in Special Flood Hazard Areas. HUD will accept comments for 60 days following the date the proposed rule, Acceptance of Private Flood Insurance for Federal Housing Administration (FHA)-Insured Mortgages (Docket No. FR-6084-P-01), is published.\u00a0 The proposed rule would allow borrowers the option of purchasing private flood insurance on FHA-insured mortgages for properties located [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":860,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[32,19,23],"tags":[],"class_list":["post-2296","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-board-briefs","category-breaking","category-publications","has_thumb"],"jetpack_publicize_connections":[],"jetpack_shortlink":"https:\/\/wp.me\/p4Y3P2-B2","jetpack_sharing_enabled":true,"jetpack-related-posts":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/albanknews.com\/wp-content\/uploads\/2016\/09\/BB-web-header.jpg?fit=1109%2C858&ssl=1","_links":{"self":[{"href":"https:\/\/albanknews.com\/index.php?rest_route=\/wp\/v2\/posts\/2296","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/albanknews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/albanknews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/albanknews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/albanknews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2296"}],"version-history":[{"count":1,"href":"https:\/\/albanknews.com\/index.php?rest_route=\/wp\/v2\/posts\/2296\/revisions"}],"predecessor-version":[{"id":2298,"href":"https:\/\/albanknews.com\/index.php?rest_route=\/wp\/v2\/posts\/2296\/revisions\/2298"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/albanknews.com\/index.php?rest_route=\/wp\/v2\/media\/860"}],"wp:attachment":[{"href":"https:\/\/albanknews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2296"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/albanknews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2296"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/albanknews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2296"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}