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Legal and Industry Developments

Melanie A. Feliciano Esq.
Jan 16, 2015

Massachusetts Flood Insurance Notice Required
If you are a lender and originate mortgages in the state of Massachusetts, a Flood Insurance Notice is required to comply with the disclosure requirements of new Section 69 under Chapter 183 of the General Laws of Massachusetts, which was enacted by Massachusetts House Bill 3783. 

Section 69 provides that if a creditor or creditor’s representative requires in a mortgage, note or otherwise that a purchaser or owner of residential property purchase or pay for flood insurance on the property, the creditor or creditor’s representative and the insurance producer, as defined in section 162H of chapter 175, shall provide a notice to the purchaser or owner at the time the purchaser or owner of the residential property is notified of the need to purchase or pay for flood insurance. Section 69 prescribes the language for the notice that needs to be provided to the purchaser or owner.

Note that the Massachusetts Division of Banks, Office of Consumer Affairs & Business Regulation, has provided a model Notice of Flood Insurance Coverage that is deemed to satisfy the requirements of Section 69. The Division of Banks has also published FAQs regarding Chapter 177 of the Acts of 2014, which is a body of law intended to further regulate flood insurance.

Single-Family Housing Guaranteed Loan Program Interim Final Rule, Effective Dec. 1, 2014
Published in the Federal Register on Dec. 9, 2013, 7 CFR Part 3555 Interim Final Rule (the “Rule”) which can be found online at http://goo.gl/HJi8pv, establishes a framework that updates, reorganizes and simplifies the Single-Family Housing Guaranteed Loan Program (SFHGLP). The Rule is designed to enhance the effectiveness of the SFHGLP by streamlining processes, reducing regulations, improving customer service and strengthening the United States Department of Agriculture’s (USDA’s) ability to manage the Program.

The new Rule is effective for all guaranteed loans issued conditional commitments on Dec. 1, 2014. The Rule has one technical handbook (HB-1-3555) (the “Handbook”) that is to be used to administer the SFHGLP efficiently and ensure that legal requirements are met. The Handbook will contain Administrative Procedures currently in the existing rule, as well as guidance now published in multiple Administrative Notices (AN).

Note that the Rule requires a new Request for Single Family Housing Loan Guarantee Form RD 3555-21 (found online at http://goo.gl/CSc7Z1) to be provided to the applicant during the application stage of the loan origination process. Form 3555-21 serves to document that the approved lender, or their agent, properly screened a mortgage loan applicant on the General Services Administration SAM.gov Web site as part of their eligibility determination of the applicant. This “check” or screening should occur prior to the request for commitment and be no greater than 30 days prior to loan closing.

To access the Handbook and review all resources and materials related to the new Rule, please visit the USDA’s LINC Training and Resource Library online at http://goo.gl/4JA3Mx.



Melanie A. Feliciano Esq. is DocMagic Inc.’s chief legal officer and currently serves as editor-in-chief of DocMagic’s electronic compliance newsletter, The Compliance Wizard. She received her JD from the Georgetown University Law Center, and is licensed in California and Texas. She may be reached by phone at (800) 649-1362 or e-mail melanie@docmagic.com.



This article originally appeared in the December 2014 print edition of National Mortgage Professional Magazine. 

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