source:
  type: regulation
  id: flood-12cfr-22.5
  authority: 12 CFR §22.5 — Escrow requirement
  description: 12 CFR §22.5 — Escrow requirement.
  coverage_tier: operative
obligations:
- id: flood-12cfr-22.5-full
  canonical_id: flood-12cfr-22.5-full
  section: 12 CFR §22.5 — Escrow requirement
  type: do
  tags:
  - regulator-direct
  - flood
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: 12 CFR §22.5 — Escrow requirement
    source_class: cfpb-regulation
    source_url: https://www.law.cornell.edu/cfr/text/12/22.5
    snapshot_id: 97cdcc2ef15d3475
    fetched_at: '2026-06-17T20:22:50Z'
    content_hash: sha256:fee44b6df2ea73c71044b08ae81673490130b67a321ad680af9ca0d7b7585cab
    paragraph_quote: '§ 22.5 Escrow requirement. (a) In general —(1) Applicability.
      Except as provided in paragraphs (a)(2) or (c) of this section, a national bank
      or a Federal savings association , or a servicer acting on its behalf, shall
      require the escrow of all premiums and fees for any flood insurance required
      under § 22.3(a) for any designated loan secured by residential improved real
      estate or a mobile home that is made, increased, extended, or renewed on or
      after January 1, 2016, payable with the same frequency as payments on the designated
      loan are required to be made for the duration of the loan. (2) Exceptions. Paragraph
      (a)(1) of this section does not apply if: (i) The loan is an extension of credit
      primarily for business, commercial, or agricultural purposes; (ii) The loan
      is in a subordinate position to a senior lien secured by the same residential
      improved real estate or mobile home for which the borrower has obtained flood
      insurance coverage that meets the requirements of § 22.3(a) ; (iii) Flood insurance
      coverage for the residential improved real estate or mobile home is provided
      by a policy that: (A) Meets the requirements of § 22.3(a) ; (B) Is provided
      by a condominium association, cooperative, homeowners association, or other
      applicable group; and (C) The premium for which is paid by the condominium association,
      cooperative, homeowners association, or other applicable group as a common expense;
      (iv) The loan is a home equity line of credit; (v) The loan is a nonperforming
      loan, which is a loan that is 90 or more days past due and remains nonperforming
      until it is permanently modified or until the entire amount past due, including
      principal, accrued interest, and penalty interest incurred as the result of
      past due status, is collected or otherwise discharged in full; or (vi) The loan
      has a term of no longer than 12 months. (3) Duration of exception. If a national
      bank or Federal savings association , or a servicer acting its behalf, determines
      at any time during the term of a designated loan secured by residential improved
      real estate or a mobile home that is made, increased, extended, or renewed on
      or after January 1, 2016, that an exception under paragraph (a)(2) of this section
      does not apply, then the bank or savings association, or the servicer acting
      on its behalf, shall require the escrow of all premiums and fees for any flood
      insurance required under § 22.3(a) as soon as reasonably practicable and, if
      applicable, shall provide any disclosure required under section 10 of the Real
      Estate Settlement Procedures Act of 1974 ( 12 U.S.C. 2609 ) (RESPA). (4) Escrow
      account. The national bank or Federal savings association , or a servicer acting
      on its behalf, shall deposit the flood insurance premiums and fees on behalf
      of the borrower in an escrow account. This escrow account will be subject to
      escrow requirements adopted pursuant to section 10 of RESPA, which generally
      limits the amount that may be maintained in escrow accounts for certain types
      of loans and requires escrow account statements for those accounts, only if
      the loan is otherwise subject to RESPA. Following receipt of a notice from the
      Administrator of FEMA or other provider of flood insurance that premiums are
      due, the national bank or Federal savings association , or a servicer acting
      on its behalf, shall pay the amount owed to the insurance provider from the
      escrow account by the date when such premiums are due. (b) Notice. For any loan
      for which a national bank or Federal savings association is required to escrow
      under paragraphs (a)(1) or (c)(2) of this section or may be required to escrow
      under paragraphs (a)(3) of this section during the term of the loan, the national
      bank or Federal savings association , or a servicer acting on its behalf, shall
      mail or deliver a written notice with the notice provided under § 22.9 informing
      the borrower that the national bank or Federal savings association is required
      to escrow all premiums and fees for required flood insurance, using language
      that is substantially similar to model clauses on the escrow requirement in
      appendix A to this part. (c) Small lender exception —(1) Qualification. Except
      as may be required under applicable State law, paragraphs (a), (b), and (d)
      of this section do not apply to a national bank or Federal savings association:
      (i) That has total assets of less than $1 billion as of December 31 of either
      of the two prior calendar years; and (ii) On or before July 6, 2012: (A) Was
      not required under Federal or State law to deposit taxes, insurance premiums,
      fees, or any other charges in an escrow account for the entire term of any loan
      secured by residential improved real estate or a mobile home ; and (B) Did not
      have a policy of consistently and uniformly requiring the deposit of taxes,
      insurance premiums, fees, or any other charges in an escrow account for any
      loans secured by residential improved real estate or a mobile home . (2) Change
      in status. If a national bank or Federal savings association previously qualified
      for the exception in paragraph (c)(1) of this section, but no longer qualifies
      for the exception because it had assets of $1 billion or more for two consecutive
      calendar year ends, the national bank or Federal savings association must escrow
      premiums and fees for flood insurance pursuant to paragraph (a) of this section
      for any designated loan made, increased, extended, or renewed on or after July
      1 of the first calendar year of changed status. (d) Option to escrow —(1) In
      general. A national bank or Federal savings association , or a servicer acting
      on its behalf, shall offer and make available to the borrower the option to
      escrow all premiums and fees for any flood insurance required under § 22.3 for
      any loan secured by residential improved real estate or a mobile home that is
      outstanding on January 1, 2016, or July 1 of the first calendar year in which
      the national bank or Federal savings association has had a change in status
      pursuant to paragraph (c)(2) of this section, unless: (i) The loan or the national
      bank or Federal savings association qualifies for an exception from the escrow
      requirement under paragraphs (a)(2) or (c) of this section, respectively; (ii)
      The borrower is already escrowing all premiums and fees for flood insurance
      for the loan; or (iii) The national bank or Federal savings association is required
      to escrow flood insurance premiums and fees pursuant to paragraph (a) of this
      section. (2) Notice. For any loan subject to paragraph (d) of this section,
      the national bank or Federal savings association , or a servicer acting on its
      behalf, shall mail or deliver to the borrower no later than June 30, 2016, or
      September 30 of the first calendar year in which the national bank or Federal
      savings association has had a change in status pursuant to paragraph (c)(2)
      of this section, a notice in writing, or if the borrower agrees, electronically,
      informing the borrower of the option to escrow all premiums and fees for any
      required flood insurance and the method(s) by which the borrower may request
      the escrow, using language similar to the model clause in appendix B. (3) Timing.
      The national bank or Federal savings association or the servicer acting on its
      behalf, must begin escrowing premiums and fees for flood insurance as soon as
      reasonably practicable after the bank or savings association, or servicer ,
      receives the borrower''s request to escrow. [ 80 FR 43243 , July 21, 2015]'
  judgment: false
