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Proposed rule would address NAFCU-flagged private flood insurance issue
The Department of Housing and Urban Development (HUD) Monday published a proposed rulemaking allowing private flood insurance for mortgages insured by the Federal Housing Agency (FHA). NAFCU previously flagged this issue in a letter sent to the NCUA in response to the federal financial regulators working to update flood insurance Q&As.
The proposal would allow for more consumer choice, may offer more affordable options for consumers, and would reduce regulatory restrictions for FHA-insured loans.
As part of the proposal, HUD included a compliance aid to help mortgagees evaluate whether a flood insurance policy meets the definition of “private flood insurance.”
The federal regulators, including the NCUA, finalized an interagency rule that requires mortgage lenders to accept both private and government-backed flood insurance policies in 2019.
NAFCU has pushed for a number of improvements to the National Flood Insurance Program (NFIP), including allowing private policies to fulfill the federal flood insurance mandate, increases in coverage limits, capping premiums and rates, and updating federal flood mapping procedures.
NAFCU will continue to update credit unions of any changes made regarding flood insurance and will continue to work with the regulators to ensure credit unions' concerns related to the interagency flood insurance Q&As are addressed.