WASHINGTON (3/24/14)--President Barack Obama has signed The Homeowner Flood Insurance Affordability Act into law.
The new law delays the implementation of certain provisions of the Biggert-Waters Flood Insurance Reform Act of 2012.
Biggert-Waters extended the National Flood Insurance Program's (NFIP) authority through Sept. 30, 2017, and mandated major flood insurance reforms, including phasing out subsidies for many properties and raising the cap on annual premium increases.
This new law delays increases in NFIP premiums until the Federal Emergency Management Agency puts in place a plan to ensure they are implemented affordably. It reinstates lower rates for grandfathered properties, which were repealed by Biggert-Waters, and extends the effective date of pending flood insurance escrow rules to Jan. 1, 2016, from July 6, 2014.
The law also clarifies that escrow requirements would apply to loans closed on or after the new effective date, and that certain loans would not be subject to the escrow requirements, such as second liens if proper coverage is in place in connection with the first lien, HELOCs, commercial loans secured by a residence, and more.
The National Credit Union Administration and federal banking regulators were in middle of writing rules to implement certain sections of Biggert-Waters when the bill, upon which the new law is based, passed the House and Senate. The regulators now need to amend the proposed regs to address the escrow changes.