Q: Escrow 4 – Does the requirement to escrow flood insurance premiums and fees apply when a loan does not experience a triggering event?
A: No, subject to certain exceptions. The Regulation provides that a lender or its servicer is required to escrow flood insurance premiums and fees when a designated loan is made, increased, extended, or renewed (a triggering event), unless either the lender or the loan is excepted from the escrow requirement. Until the loan experiences a triggering event, the lender is not required to escrow flood insurance premiums and fees, unless:
(i) a borrower requests the escrow in connection with the requirement that the lender provide an option to escrow for outstanding loans; or
(ii) the lender determines that a loan exception to the escrow requirement no longer applies.