Federal Regulatory and Mississippi Legislative Update

Federal Regulatory and Mississippi Legislative Update

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance

Corporation, the Office of the Comptroller of the Currency, the National Credit Union  Administration, and the Farm Credit Administration (the “Agencies”) on March 29, 2013 issued guidance to inform financial institutions about revisions to the Flood Disaster Protection Act of 1973 (the “FDPA”).  The Agencies will issue regulations to further implement the FDPA.  The Mississippi legislature recently amended its laws to allow recordation of an affidavit of scrivener’s error (the “affidavit”) as an additional means for correcting certain errors in instruments affecting title to real estate, effective March 25, 2013.

 

Interagency Statement on Revisions to Flood Disaster Protection Act of 1973

 

The FDPA provides that a lender or its servicer must notify a borrower if it determines that the flood insurance coverage on the improved real estate or mobile home serving as collateral for the borrower’s loan has expired or is less than the amount required for that particular property.  The notice must inform the borrower that he or she must purchase flood insurance.  If the borrower fails to purchase flood insurance within 45 days after notification, the lender or servicer must purchase flood insurance on behalf of the borrower and may charge the borrower for the cost of premiums and fees incurred by the lender or servicer.  The FDPA was amended to:

  • Provide that the premiums and fees that a lender or servicer may charge the borrower include premiums or fees incurred for coverage beginning on the date  on which flood insurance coverage lapsed or did not provide sufficient coverage amount;
  • Require the lender or servicer, within 30 days of receiving a confirmation of a borrower’s existing flood insurance coverage, to terminate any force-placed  insurance and refund to the borrower all force-placed insurance premiums and  any related fees paid for by the borrower during any period of overlap between  the borrower’s policy and the force-placed policy; and
  • Require a lender or servicer to accept as confirmation of a borrower’s existing flood insurance policy a declarations page that includes the existing flood insurance policy number and the identity and contact information for the insurance company or agent.

 

The maximum civil money penalty for a FDPA violation has been increased to $2,000 from $350.  In addition, the penalty cap per year has been deleted.

 

 

The mandatory purchase requirement has been amended to require lenders to accept private flood insurance policies as satisfaction of the mandatory purchase requirement if the coverage provided by the private flood insurance satisfies the standards specified in the FDPA.  In addition, when the Agencies issue regulations, regulated lenders will be required to disclose to borrowers that:

  • Flood insurance under the National Flood Insurance Program (“NFIP”) is available from private insurance companies or from the NFIP directly;
  • Flood insurance that provides the same level of coverage as an NFIP policy may be available from private insurance companies; and
  • Borrowers are encouraged to compare policies.

 

When the Agencies issue regulations, lenders and servicers will be required to establish escrow accounts for flood insurance premiums and fees for residential improved real estate or a mobile home, for any loan secured by such residential improved real estate or mobile home outstanding or entered into after July 6, 2014.  Except as may be required under applicable state law, a lender is exempt from the escrow requirement if:

  • The institution has less than $1 billion in assets; and
  • The institution is not required by federal or state law to escrow taxes or insurance for the term of the loan, and it did not have a policy to require escrow of taxes and insurance.

 

MISSISSIPPI HOUSE BILL 928

 

 

Notice of a typographical or other minor error in an instrument affecting the title to real estate may be given by recording an affidavit.  If an affidavit is conspicuously identified as an affidavit of scrivener’s error, the chancery clerk must index the affidavit in the general index under the names of the original parties to the instrument if they are identified in the affidavit, and in the sectional index as provided in the indexing instructions of the affidavit.

 

 

Notice of the corrective information provided by the affiant is effective upon recordation.  An affidavit may be prepared only by an attorney licensed to practice law in Mississippi who prepared any instrument in the chain of title to the subject real estate.

 

 

The affidavit must be sworn to and acknowledged before any officer or person authorized to administer an oath under Mississippi law, and will be recordable in the land records in the office of the chancery clerk in the county where the real estate is situated.  If requested, the chancery clerk must make a marginal notation on the instrument to which the affidavit refers.

 

 

The affidavit is not in lieu of a corrected instrument that still may be recorded.