MBA, Trade Groups Weigh in On Private Flood Insurance

The Mortgage Bankers Association and 10 other industry organizations commented this week on private flood insurance questions and answers published by regulatory agencies.

In February, the Office of the Comptroller of the Currency, the Farm Credit Administration’s Office of Regulatory Policy, the Board of Governors of the Federal Reserve System, the National Credit Union Administration and the Federal Deposit Insurance Corp. requested comments on Questions and Answers the agencies developed on private flood insurance rules for regulated financial institutions.

MBA, the National Association of Realtors, the American Bankers Association and others joined in the letter to regulators. “Rules that seem straightforward can become complicated when applied in the operational context of real estate finance,” the letter said. “For example, rules that work in single-family residential lending situations are often less clear in the world of multifamily or commercial transactions.”

The comments focused on ensuring that institutions can accurately apply rules in practice, leveraging the organizations’ deep expertise in lending, servicing and flood insurance. The groups also suggested the Q&As be considered “guidance only” rather than the basis for supervisory action.

“We believe it is important for the Agencies to note on the face of the finalized Q&As that they are guidance only and should not serve as the basis for supervisory action,” the letter said. “As recently noted in the final rule regarding the Role of Supervisory Guidance, the Agencies recognize a difference between supervisory guidance and formal regulations and how agencies expect institutions and their management to react to supervisory guidance.”

The agencies will review these comments and others before issuing final Q&As.

(Bruce Oliver is MBA Associate Vice President of Commercial/Multifamily.)