It appears the Regulatory Agencies all agree that the detached residential structure provision within the 2014 Homeowner Flood Insurance Affordability Act (HFIAA) became effective on March 21, 2014. In a letter written to the American Banker’s Association on behalf of the Federal Reserve Board, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, National Credit Union Administration and Farm Credit Administration, it states:
We would like to note that the provisions pertaining to detached structures became effective upon enactment. Moreover, the Agencies anticipate revising the “Interagency Questions and Answers Regarding Flood Insurance” after final regulations have been issued to implement the Biggert-Waters Act and the HFIAA.
So, the detached residential structure provision is in effect and we’ll soon get some regulation and guidance. Fair enough. But, why don’t we have an “official” interagency statement with some sort of expectation in lieu of forthcoming guidance and regulation? I mean, somebody somewhere must have a general idea of what will be expected from financial institutions relying on the new provision, right?
Two important questions remain unanswered:
1. What is a “residential” detached structure?
2. How do we give the disclosure required by the Act?
If you’d like more background and perspective on these two questions please read our Detached Residential Structures & Flood Insurance Update blog.
At the end of the day, we’re still advising banks not to do this until further guidance is issued. However, a financial institution may rely on the new provision at their own risk.