A Regulatory & Legislative Advisory for Compliance Professionals
Inside . . .
2 ABA Praises
Mortgage Cure, Seeks
2 ABA Wins
Extension on Privacy
Exceptions to Mitigate
Fair Lending Risk
3 Trades Support
4 Report: Operation
4 Issa: FDIC Involved
5 CFSA Sues to End
Risk in Ratings
5 NACHA: Guidance
on Higher-Risk ACH
6 ABA Urges
REGULATORS CLARIFY MULTIFAMILY
FLOOD INSURANCE OBLIGATIONS
As ABA has advocated for months, five federal agencies on May 30 issued guidance
on how bankers should respond to the increased National Flood Insurance Program
coverage limits for multifamily housing. Effective June 1, the Federal Emergency
Management Agency, which administers the NFIP, increased the coverage limits from
$250,000 to $500,000 for apartments, co-ops, hotels, dormitories and other
residences with five or more units.
The federal banking agencies said that the Biggert-Waters flood insurance reform law
does not require lenders to perform an immediate, full file search of its loan portfolio.
The obligation to determine the adequacy of insurance coverage only arises if the
lender or servicer “receives notification” or “makes a determination” that the building is
inadequately insured, the agencies said.
Since the higher coverage limits were announced in December, bankers have sought
regulatory guidance on their obligations to ensure their multifamily property borrowers
acquire additional coverage – seeking to avoid a need to send force-placement
notifications on June 1. With so little time before the higher coverage limits took effect,
ABA noted, banks had to choose between doing nothing and facing possible
regulatory criticism or unnecessarily preparing to initiate the force-placement process.
Read the guidance.
ABA Seeks Additional Time to Comply
ABA on June 5 filed comments to the agencies requesting that they give banks
reasonable amount of time to implement the changes brought about by
the interagency statement on increased flood insurance coverage for multi-family, non-condominium residential buildings. "We respectfully request that you announce to your
regulated constituencies that institutions will not be examined for compliance with the
guidance until 90 days after the FFIEC examination procedures have been re-published," ABA wrote.
ABA also asked the agencies to provide clear and timely guidance on regulatory
expectations. Finally, ABA urged the agencies and the FFIEC to meet with our staff to
discuss how we can work together to facilitate a more effective solution to flood
insurance compliance. Read the letter. For questions, contact ABA's Ginny O'Neill.
ABA, ABIA Support Private Flood Insurance Bill
In related news, ABA and its American Bankers Insurance Association subsidiary has
written to Congress to support legislation intended to increase the availability of private
flood insurance. The companion bills – S. 2381 and H.R. 4558 – would build on