2007 Update to FFIEC Interagency Questions and Answers on Flood Insurance
Enclosed is our comment letter.
<<flood insurance comment letter.doc>>
Charles P. Dana
Senior Vice President and General Counsel
The Farm Credit Council
50 F. St. NW, Suite 900
Washington, DC 20001-1530
THE FARM CREDIT COUNCIL
50 F STREET NW • SUITE 900 • WASHINGTON, DC 20001-1530 • 202/626-8710
Serving the Farm Credit System WASHINGTON FAX (202) 626-8718
May 20, 2008
Mr. Gary K. Van Meter
Office of Regulatory Policy
Farm Credit Administration
1501 Farm Credit Drive
McLean, VA 22102-5090
Re: FLOOD INSURANCE Q & A
Dear Mr. Van Meter:
The Farm Credit Council (Council), on behalf of its membership, appreciates the opportunity to comment on the proposed rule published in the March 21, 2008 Federal Register (73 FR15259). The comments that follow were developed after soliciting input from all Farm Credit System (System) institutions. Because particular aspects of the Federal Flood Insurance Program impact our members in different ways, we anticipate that several of them will be providing their own comments.
System institutions are concerned about the questions and answers relating to the obligations of purchasers of loans via participations, syndications, or other assignments and their ability to rely on specific contractual terms with the lead lender as to compliance with any applicable insurance requirements. We urge the agency to adopt a final Q & A that specifies that purchase of a loan, or an interest in a loan, does not trigger any additional obligations on the part of the purchaser, and that the purchaser is entitled to rely on the lead or administrative lender for compliance with flood insurance requirements.
They are also concerned that the current understanding regarding overage of structures of insignificant value be confirmed. That is, if the building value is less than the maximum available deductible level, no coverage is required. (A grain bin with worth $4000 and subject to a $5000 deductible does not need to be insured.)
We urge you to carefully consider the specific comments submitted by individual institutions. They are involved on a day-to-day basis with the practical aspects of compliance with this program. If the Q & A is to serve as useful guidance for lenders, their questions and comments should be answered.
We appreciate this opportunity to provide comments on the proposed Q & A. We would be happy to discuss any of the points with you. We believe the flood insurance program is an important tool for borrowers as well as lenders and we want to make the program as cost effective and efficient as possible.
If you have any questions, please feel free to contact me.
Sr. Vice President and General Counsel
- flood insurance comment letter.doc