Currently two flood insurance escrow data integrity warnings are in place, per our previous announcement. They both fire when the annual flood insurance amount is entered, but flood insurance escrow is being waived.
One triggers for loans made on or after 10/01/2015:
“Flood Insurance Escrow is being waived. Federal law (particularly 12 CFR § 208.25[e]) requires flood insurance premiums to be escrowed if an escrow account is required for other assessments in connection with a designated loan secured by residential improved real estate or a mobile home.”
The other is for loans made on or after 01/01/2016:
“Flood Insurance escrow is being waived. Federal law (particularly 12 CFR § 208.25[e]) requires flood insurance premiums to be escrowed for any designated loan secured by residential improved real estate or a mobile home.”
Since the 01/01/2016 rule is now effective for all loans (whether other items are being escrowed is no longer a factor), the 10/01/2015 rule is being removed, leaving only one warning. The updated warning text will be as follows:
“Flood Insurance is not being escrowed. Federal law (particularly 12 CFR § 208.25[e]) requires flood insurance premiums to be escrowed for any designated loan secured by residential improved real estate or a mobile home.”
HELOCs and loans with a term of 12 months or less will be excluded from triggering this warning message, since they are exempt from the requirement. The logic triggering the warning has also been modified to trigger for second liens that are marked as requiring flood insurance, even if the annual flood insurance amount has been left blank.
In addition, a new field has been created called “Full Flood Insurance is Escrowed with First Lien”, that can be set to “Yes” to prevent the warning from triggering for second liens, even if flood insurance is required and is not being escrowed with the second lien.
A new optional field prompt will be added for “Full Flood Insurance is Escrowed with First Lien” for second liens when flood insurance is required, or if the annual flood insurance amount is entered but flood insurance escrow is being waived. If set to “Yes”, the flood warning will not trigger for second liens, since it will mean the full flood insurance amount is already being escrowed with the first lien loan.
These changes will take effect on December 8, 2016. If you have any questions or concerns, please contact Client Support at 1.800.497.3584.
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