![]() ![]() The Joint Final Rule requires an institution subject to the rule to accept a qualifying private flood insurance policy. The final rule sets forth specific requirements that a policy must meet to be considered to provide coverage at least as broad as a SFIP. Consistent with the Joint Final Rule, to qualify as private flood insurance under the HUD final rule a policy must be issued by an insurance company that meets certain conditions, and the policy must provide flood insurance coverage that is at least as broad as the coverage provided under a standard flood insurance policy (SFIP) issued under the NFIP for the same type of property, including when considering deductibles, exclusions, and conditions offered by the insurer. The final rule applies to Title I manufactured home loans, Title II single-family home loans, and HECM loans. ![]() Act to encourage an expanded private flood insurance market.” Addressing the rationale for allowing private flood insurance policies with FHA-insured loans, HUD states in the preamble to the final rule that an FHA lender’s “acceptance of private flood insurance policies would provide borrowers with more flood insurance choices, promote consistency with industry standards, reduce the regulatory restrictions on flood insurance for FHA-insured loans, and harmonize FHA policies with the congressional intent expressed in the. Prior to the HUD final rule, HUD only accepted flood insurance policies issued under the National Flood Insurance Program (NFIP). HUD notes in the preamble to the final rule that the Act does not impose requirements on FHA-insured loans. The regulators are the Farm Credit Administration, Federal Deposit Insurance Corporation, Federal Reserve Board, National Credit Union Administration, and Comptroller of the Currency. Although the Joint Final Rule took effect on July 1, 2019, it does not apply to FHA-insured loans. Both the final rule and Mortgagee Letter are effective December 21, 2022.Īs previously reported in February 2019 federal regulators issued a joint final rule (the “Joint Final Rule”) to implement provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 (the “Act”) that require regulated financial institutions to accept private flood insurance policies. HUD also issued Mortgagee Letter 2022-18 addressing with regard to FHA-insured loans general flood insurance requirements, flood insurance requirements for condominiums, manufactured homes and home equity conversion mortgage (HECM) loans (i.e., reverse mortgage loans), and private flood insurance requirements. Department of Housing Urban Development (HUD) recently issued a final rule permitting the use of private flood insurance policies with FHA-insured mortgage loans.
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