WASHINGTON – Lenders will be forced to accept private flood insurance

WASHINGTON – Lenders will be forced to accept private flood insurance to satisfy coverage requirements for federally backed mortgages under a new rule published by federal regulators. Previously, only National Flood Insurance Program policies were considered acceptable. The final rule, posted by the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency, ends years of confusion over the interpretation of Biggert-Waters Flood Insurance Reform Act of 2012. The law was intended to create a market for NFIP alternative products, but even after it passed, lenders were still reluctant to embrace the private flood insurance market (Best’s News Service, June 21, 2017). “The final rule requires regulated lending institutions to accept policies that meet the statutory definition of ‘private flood insurance’ in the Biggert-Waters Act,” the rule said. It also “permits regulated lending institutions to exercise their discretion to accept flood insurance policies issued by private insurers and plans providing flood coverage issued by mutual aid societies that do not meet the statutory definition of ‘private flood insurance,’ subject to certain restrictions.”