Banking Agencies Implement the Private Flood Insurance Provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 (Biggert-Waters Act)
The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Farm Credit Administration, and the National Credit Union Administration are amending their regulations regarding loans in areas that have special flood hazards, in order to implement the private flood insurance provisions of the Biggert-Waters Act. This final Rule is effective July 1, 2019.
The final Rule requires regulated lending institutions to accept “private flood insurance,” as defined in the Biggert-Waters Act. The final Rule also includes a streamlined compliance aid provision to help regulated lending institutions evaluate whether a flood insurance policy meets the definition of “private flood insurance.”
In addition, the final Rule permits regulated lending institutions to choose to accept certain flood insurance policies issued by private insurers, even if the policies do not meet the statutory and regulatory definition of “private flood insurance,” provided the policy provides sufficient protection for a designated loan, consistent with general safety and soundness principles, and a requirement that the regulated lending institution document its conclusion regarding the sufficiency of protection in writing. The final Rule also allows regulated lending institutions to exercise their discretion to accept certain plans providing flood coverage issued by “mutual aid societies.”