Q: Escrow Small Lender Exception 6 – If the borrower has waived escrow of flood insurance premiums and fees, does the lender or its servicer still need to send a notice to offer the ability to escrow for the flood insurance?
A: Yes, if the small lender exception no longer applies. See Q&A Escrow Small Lender Exception 5. The Regulation does not exclude loans for which borrowers have previously waived escrow from the requirement to offer and make available the option to escrow flood insurance premiums and fees. Consequently, lenders or their servicers must send a notice of the option to escrow flood insurance premiums and fees to borrowers who have previously waived escrow or for whom lenders previously offered an option to escrow.138 Although a borrower may have previously decided to waive escrow or been offered an option to escrow, it is possible that the borrower’s circumstances have changed, and if offered another chance to escrow, the borrower may desire to do so.