Well, you know that this portion of the proposed regulations have not changed since they were first issued in the October 2013 proposal and then again in the 2014 proposal.

So, my question to all of you that are so flabbergasted over the outcome - did you write your comment letters and bring all of these points to the attention of the drafters of the regulation??

If you read the preamble to both the revised proposal issued in October 2014 and the final regulation, the regulators do not indicate that they received any such comments on this section of the proposed regulations.

Do we just give current flood loans the option to escrow or do we have to set up escrow for them?

I tried to comment once on a proposed regulation and gave up after an hour of no luck navigating the site.

Russ,

(1) Are you currently exempt as a small creditor from HPML escrow? (2) Do you currently have any escrow accounts in your portfolio? (3) Were you subject to an escrow requirement under Reg Z before 7/7/2012 from which you could not claim an exemption? (4) Did you have a policy before 7/7/2012 of requiring escrow?

If you answer "No" to (1) or "Yes" to (2), (3) or (4), or at year-end 2014 or 2015 your total assets are $1 billion or more, you'll have to escrow flood insurance premiums and fees. If you have to escrow flood insurance premiums and fees as of 1/1/16, you will have to notify any borrowers on the books as of 1/1/16 of their option to escrow with you. That notice will be due by 6/30/16.

Well, that is sort of like complaining about who gets elected when you don't vote.......

Even I comment all the time and if I can figure it out, it can't take a rocket scientist. I suggest trying it again in the future.

By "notice will be due by 6/30/16" John do you mean the customer has to notify us by then if they want to escrow? Nevermind...i get it.

John, we are currently exempt as a small creditor, but yes, we have escrow accounts we still maintain (HPMLs established prior to our claiming the small creditor exemption). Yes, we had no exemption before 7/7/2012 as we did originate (and escrow for) HPMLs. Our policy of requiring escrow prior to 7/7/2012 was for those HPMLs....we didn't require escrows for anything but those.

Randy, i understand that. If you'll remember though, i think it was pretty universal that the escrow exemption for this flood rule was going to mirror the HPML escrow exemption.

This caught my attention. If you pay an annual premium initially, you're covered...if you lapse, we are required to cover you...so the only thing I see beneficial is to the consumer as a friendly pay-by-month option. I don't see where it helps keep from giving out disaster funds as it doesn't eliminate all those folks with no mortgage, or in a non-participating community or non-designated zone that don't have insurance and then the worst happens.

Perhaps you should submit a comment/question as to the impact on regulatory cross over.

Did something change with the language between this discussion and the actual published rule?

http://www.bankersonline.com/forum/ubbthreads.php?ubb=showflat&Number=1888190

Oh wait...it looks like the evil "or before" was added...hummm.

That presumes a well thought out law change!

I don't guess i understand why "before" would make a big change. It was after July of 2012 that the HPML escrow exemption came into being wasn't it? I'm thinking it was 2013.

The government could fix this. New rule.....if your home is in a flood zone and you don't buy flood insurance and your house floods, FEMA will help. Rebuild your home, same location, STILL don't buy flood insurance and your house floods....no more money, stupid. I snipped the below comment out of an interesting article about FEMA and flood insurance.

"And what does this teach you... DON'T BE RESPONSIBLE and purchase insurance, because the government will bail out the irresponsible people with taxpayer money. The responsible people who buy insurance can obviously afford to go it alone, so the government won't help them. They only care about the people dependent on government. Their voter base."

Just looked, yeah it was ... I'm not sure what the significance of that date is unless it was a date that was the driving factor for implementing regulations that didn't come out until later?

HFIAA imposed mandatory escrow of flood insurance premiums and fees for loans secured by residential improved real estate or mobile homes that are made, increased, extended or renewed on or after January 1, 2016

So, does this mean existing flood loans have to be escrowed if we renew? Like a balloon loan that we would modify after the initial first term?

They didn't in the proposals so I'm not sure how everyone thought that it would suddenly morph in the final rule. Like I said, they didn't make any significant changes to this section of the proposals. The HMPL rules are a $2 Billion - the flood rules can't be as the $1 Billion is hard coded in the law. Additionally, the July 2012 date came from the date the original BWA was enacted, which is also hard coded in the law.

The regulators can't change the law via regulations.

Randy, did you check out the thread that Joker linked?

$2 billion vs. $1 billion isn't an issue for my bank....we're well below either. Just sayin.

Even then I said:

Well, hopefully enough banks expressed concern with the way that was written in their comment letters and they will clarify.

There is much discussion in this previous thread Previous Thread that also contradicts some interpretations expressed in this thread.

And banks that escrowed only because they had to under HPML; then later claimed the small creditor escrow exemption....will now have to escrow for flood insurance, thus ruining their small creditor HPML escrow exemption? IOW, we will be back to a full-time escrowing bank for all our HPMLs again?
I believe this is correct - although I agree it seems like they "back doored" us. I don't like it either as a consultant that works with hundreds of small banks.

I am just now reading the final rule too & I just honed in on the "entire term of the loan" wording. HPML escrow requirements are only for 5 years. After 5 years, the escrow can be waived if current and 80% LTV, but either way, it's not the entire term of the loan. I think this does get us out of escrowing IF you're:
1) < $1 Billion, and
2) only escrow for HPML's unless there is a state law that requires it for the entire term of the loan.

Bingo.

Sorry, got insanely busy......thanks for chiming in David and Indy Banker. Perhaps hope lives.