Regulators issued a proposal on Friday that would require banks to escrow premiums and fees for flood insurance on mortgages made or refinanced after Jan. 1, 2016.

The plan implements changes required by the Homeowner Flood insurance Act of 2014, which itself amended a law passed two years earlier.

Among other changes, the proposal would eliminate the requirement for flood insurance on detached structures on properties in a special flood hazard area as long it does not also serve as a residence. But it would allow lenders to require flood insurance on a detached structure if it protects the home or property underlying the mortgage.

The latest flood insurance bill was passed in March to fix some of the unintended consequences from the 2012 Biggert-Waters Act which resulted in many consumers with modest incomes seeing their flood insurance premiums skyrocket. It also made it difficult for some consumers to sell their homes because a higher insurance rate would be activated upon the sale of the residence.

The proposal would limit how much the annual insurance premium could increase and allow the current rates to stay with the property when it is sold.

The plans would also include new and revised sample notice forms with regards to the escrow requirements.

The five agencies issuing the proposed rulemaking were the Federal Reserve Board, Farm Credit Administration, Federal Deposit Insurance Corp., National Credit Union Administration, and the Office of the Comptroller of the Currency. Comments are due 60 days after the proposed rule is published in the Federal Register.

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