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Highlights: 

The proposed rule would:

• Require regulated lending institutions to accept private flood insurance to satisfy the mandatory purchase of flood insurance requirement if the private flood insurance meets the statutory definition of the term “private flood insurance” as well as the terms and coverage amount required under the Flood Disaster Protection Act. 
• Require institutions to disclose the availability of flood insurance from private flood insurance companies, and encourage borrowers to compare flood insurance policies offered under the National Flood Insurance Program with policies offered by private insurance companies. 
• Require regulated lending institutions to escrow premiums and fees for flood insurance for any residential loans secured by residential improved real estate or a mobile home with the same frequency as regular payments made on the loan. The proposal specifies when lenders must begin escrowing, and requires lenders to give borrowers 90 days written notice before escrowing for outstanding loans. The proposed rule includes an exemption for certain smaller lenders, as well as for business, commercial and agricultural loans, second lien loans, and residential condominium association policies. 
• Clarify that a lending institution may charge a borrower for force-placed insurance coverage commencing on the date a borrower’s flood insurance policy lapses or does not provide sufficient coverage. The proposed rule would require an institution to terminate a force-placed insurance policy, and refund any payments a borrower made for overlapping coverage within 30 days of the borrower presenting evidence of flood insurance coverage. 

Distribution: 
�౦��Ϸ����-Supervised Institutions 

Suggested Routing: 
Chief Executive Officer 
Chief Compliance Officer 
Chief Loan Officer 

Note: 
�౦��Ϸ���� Financial Institution Letters (FILs) may be accessed from the �౦��Ϸ����'s Web site at www.fdic.gov/news/financial-institution-letters/2013/index.html . 

To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html . 

Paper copies may be obtained through the �౦��Ϸ����'s Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (877-275-3342 or 703-562-2200).