Banking Agency Issues Guidance on Flood Insurance
As NAHBNow previously reported, the Federal Emergency Management Agency (FEMA) extended the grace period for renewing flood insurance policies from 30 days to 120 days because of the COVID-19 pandemic. The extension of the grace period applies to policies expiring between Feb. 13, 2020, to June 15, 2020.
On April 15, 2020, the Office of the Comptroller of the Currency (OCC) issued a statement in response to the FEMA extension to provide guidance to the financial institutions it regulates, and address conflicts between the FEMA rule and banking agency flood insurance rules.
The guidance specifically addresses how financial institutions can address requirements under OCC’s flood insurance force placement regulations. When a bank determines that a designated loan is not covered by flood insurance or is not covered by a sufficient amount of flood insurance, it must notify the borrower that they should obtain sufficient flood insurance at the borrower’s expense for the remaining term of the loan. If the borrower does not provide evidence of sufficient coverage within 45 days after notification, the bank must force placement of flood insurance in an amount that will satisfy the regulatory requirements.
In recognition of the serious impact the COVID-19 emergency may have on consumers, OCC’s statement indicates that it will not take enforcement or supervisory action against banks for “reasonable delays in complying with” the OCC’s force placement of flood insurance regulations. OCC further states that banks could provide notification to borrowers 45 days prior to the end of the 120-day extended grace period concerning the need for sufficient coverage. Additionally, banks are reminded that if flood insurance is force placed during the extended grace period, the banks must refund the cost of the overlapping coverage to the borrower.
Without OCC’s clarification, the extension of the NFIP grace period could have resulted in a borrower being forced placed during the grace period when the borrower is fully covered by flood insurance. OCC is one of several financial regulating agencies, and additional guidance will be need from those agencies to fully address the issue.
For more information, contact Tamra Spielvogel at 800-368-5242 x8327.
Latest from NAHBNow
Aug 29, 2025
NAHB's Monthly Update Features Canadian Lumber Duties Talking PointsThe update provides the latest messaging framework to help members articulate housing priorities and latest news related to the Canadian lumber imports and builder sentiment.
Aug 28, 2025
Podcast: Congressional Priorities and the Trump Economy Heading into FallOn the latest episode of NAHB podcast Housing Developments, NAHB CEO Jim Tobin and COO Paul Lopez discuss how the rest of the year looks as Congress gets ready to return to Washington next week.
Latest Economic News
Aug 29, 2025
Multifamily Absorption Rises in the Second QuarterThe percentage of new apartment units that were absorbed within three months after completion rose in the second quarter, according to the Census Bureau’s latest release of the Survey of Market Absorption of New Multifamily Units (SOMA).
Aug 28, 2025
Mortgage Rates Move Lower, Hitting 10-Month LowAverage mortgage rates in August continued their steady decline and are now at their lowest rate since last November.
Aug 27, 2025
Wood-Framed Home Share Increased in 2024Wood framing continues to dominate the U.S. single-family home construction market, according to NAHB analysis of 2024 Census Bureau data.