Q: What institutions are exempt from the flood escrow rules that become effective January 1, 2016?
A: The FDPA, as amended by Biggert-Waters, provides that, except as may be required under applicable State law, a regulated lending institution would not be required to escrow if certain qualifications are met. Effective January 1, 2016, a “small lender” exception states that an institution would be exempt from the escrow requirements if:
it has total assets of less than $1 billion as of December 31 of either of the two prior calendar years; and
on or before July 6, 2012:
was not required by Federal or State law to escrow taxes or insurance for the term of the loan secured by residential improved real estate or a mobile home; and
did not have a policy of uniformly and consistently escrowing taxes and insurance for any loans secured by residential improved real estate or a mobile home.
The Agencies note that the escrow provisions in the Agencies’ rules in effect on July 5, 2012, the day before Biggert-Waters was enacted, remain in effect, and will be enforced by the Agencies, through December 31, 2015.
The final rules also address changes in status for an institution. Check your Agency’s regulation for guidance on changes in status.