According to new rules proposed by federal banking agencies, mortgage servicers would be required to escrow premiums and fees for flood insurance. This rule change is in accordance with the Homeowner Flood Insurance Affordability Act of 2014, which amends the escrow provisions of the Biggert-Waters Flood Insurance Reform Act of 2012.
According to HFIAA, the proposed rule would require regulated lending institutions to escrow premiums and fees for flood insurance for loans secured by residential improved real estate or mobile homes that are made, increased, extended or renewed on or after Jan. 1, 2016, unless the regulated lending institution or a loan qualifies for a statutory exception.
Under this regulation, homeowners who are required to have flood insurance–who use smaller lenders–would be able to spread their premium payments over 12 months. Most larger lenders already