skip to main content
This is the start of the main content


Federal Reserve Issues Guidance on FEMA’s 120-Day Payment Grace Period

The Federal Reserve issued guidance providing regulated lending institutions direction on how to handle lender placement of flood insurance in response to FEMA extending the NFIP policy payment grace period from 30 to 120 days. The guidance is in the form of FAQs issued to address general COVID 19 relief.

Similar to the OCC’s directives that were communicated by Proctor, on April 24, 2020, the Federal Reserve is providing lenders with flexibility on how to handle force placement during the 120-day grace period. According to the Federal Reserve, “a lender may provide the required notice to the borrower after determining the policy has expired with an indication that the NFIP grace period has been extended for 120 days.” Regardless of the method chosen by lenders with respect to force placement, the Federal Reserve mandates that in all instances a lender must force place flood insurance if the borrower does not pay the premium by the end of the FEMA grace period.

As a proactive measure, if Proctor is providing flood insurance borrower notification services for your institution, a disclosure informing the borrower of the extended grace period for NFIP flood insurance premium payments will be included with lender placement notifications. No other changes will be made to your institution’s notification cycle. If Proctor does not provide flood insurance borrower notifications for your institution, please review the OCC and Federal Reserve guidance to determine if any changes need to be made to your flood compliance notifications or procedures.

To review the Federal Reserve’s COVID-19 Supervisory and Regulatory FAQs pertaining to flood insurance, follow this link to the Consumer Issues section.

Please contact your account representative if you have any questions.