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OCC Guidance on FEMA’s 120-Day Payment Grace Period

As previously communicated by Proctor, on March 29, 2020, the Federal Emergency Management Agency (FEMA) extended the NFIP policy payment grace period from 30 to 120 days. The grace period is applicable to policies that expire between February 13, 2020 and June 15, 2020.

Recently, the OCC provided guidance to mortgage industry groups that gives regulated lending institutions some direction on how to handle lender placement of flood insurance during the FEMA grace period. According to the OCC’s guidance, “a bank may provide the notice required by § 22.7 to the borrower after determining the policy has expired informing the borrower they should obtain sufficient flood insurance, which also includes an indication that the NFIP grace period has been extended for 120 days.” At this time, the guidance is not yet officially published on the OCC’s website, and no other federal regulators issued guidance.

As a proactive measure, if Proctor is providing flood insurance borrower notification services for your institution, Proctor will implement a disclosure that will advise the borrower of the extended grace period for NFIP flood insurance premium payments. The disclosure will be included with your flood lender placement borrower notifications. The content of the notification will be provided to you via a separate communication.  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 guidance to determine if any changes need to be made to your flood compliance notifications or procedures.

Please contact your account representative if you have any questions.