Regarding the exemption from mandatory escrow of flood insurance for subordinate lien loans, is the Bank required to monitor whether a subordinate lien loan is moved to the first-lien position?
No. The Bank is not required to monitor the loan’s lien position. Whether the loan qualifies for the exemption is determined at the time the loan is made, increased, extended, or renewed, on or after January 1, 2016. Note, however, that if the Bank becomes aware (for whatever reason) that the loan is no longer in a subordinate position, then it will be required to escrow for flood premiums and fees at that point.
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