In a joint comment letter to the Massachusetts Division of Banks, ABA/ABIA detailed concerns over the unintended consequences of this law, including:
- The need for further guidance clarifying how servicers must treat borrowers who already have flood insurance in amounts greater than the outstanding balance of the loan.
- How to advise consumers who have chosen to buy flood insurance policies that provide benefits on a replacement cost basis.
- Could there be a conflict of law issues between federal statutes and the new Massachusetts’s law. For example, do nationally chartered banks have to adhere to the Massachusetts’s statute?
- How would a lender notify a borrower that they must also change their flood insurance after securing a HELOC? Or, what is the flood standard to be applied in a Lender Placed (LPI) environment?
Read the joint ABA/ABIA Letter.
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