Flood Disaster Protection Act and Modified Loans

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Question:

My question pertains to the FDPA (Flood Disaster Protection Act) regarding the notification requirements to the borrower when a loan is modified. Is the bank required to provide the Notice of Special Flood Hazard and Availability of Federal Disaster Relief Assistance to the borrower when the loan is being modified? The modification was to lower the current rate on the existing loan. I have read the FDIC section 339.9 requirements, the 2009 Interagency Q and A's, and the Mandatory Purchase of Flood Insurance Guidelines (2007) and all are mute to the notice requirements pertaining to loan modifications.

Answer:

If all the modification did was modify the rate then it would not fall within the M.I.R.E. category. If the modification increased the loan or extended its maturity then it would fall within the M.I.R.E. category (Make, Increase, Renew or Extend) and new disclosures would be required.

First published on BankersOnline.com 5/14/12