Flood Insurance: Compliance Issues and Enforcement Topics that Continue to Plague Lenders
The flood insurance regulations have been around since 1996, yet examiners continue to cite numerous violations and fines.
Flood has been announced as one of the regulators’ principal areas of concern. We’ve also had changes in the law, with the Biggert-Waters Flood Insurance Reform Act of 2012, that has influenced compliance efforts.
There are still significant issues out there, which the regulators are still attempting to deal with through their questions and answers process. There were finally some clarifications issued on a few issues, but questions remain. A quick look around also shows that more than a few lenders out there are being fined for flood problems, and the penalty amounts are not a laughing matter.
We’ll concentrate on some of the more vexing issues in flood compliance, such as monitoring, contents coverage, and the ever-present condo problem, by talking through sample scenarios and explaining best practices in keeping your portfolio covered.
- What exactly do the flood insurance rules cover?
- What is a covered structure or an insurable mobile home?
- Determinations: when you must do them, reliance upon previous determinations, disputes over their results, and the role of life-of-loan coverage
- Flood zone discrepancies – how to deal with them
- Insurable value – what is it and how is it calculated?
- Coverage Amounts: “Normal” situations, condo coverage, multi-structure, and construction situations
- “Knowledge is King” – when you have to know
- Documentation and retention: the Standard Flood Hazard Determination Form, notice to customers, and proof of insurance
- What do you have to monitor?
- The types of policies and their limitations, including NFIP (National Flood Insurance Program) and private policies
- Force-placing insurance – why and how
- Insurance premiums and Congressional action
- Increasing regulatory expectations
This interactive session will give an in-depth understanding of these rules and is imperative for anyone performing duties in real estate lending areas of the financial institution. This includes loan officers, supervisors, auditors, closing agents, compliance officers, trainers and others working in these types of positions.
Carl Pry is a Certified Regulatory Compliance Manager (CRCM) and Certified Risk Professional (CRP) who is a Managing Director for Treliant Risk Advisors in Washington, DC. Through his working career, as well as through his experience as a banking attorney and officer, he has provided a variety of regulatory compliance and financial performance services to financial institutions and other clients throughout the country. He has written extensively regarding consumer and commercial compliance, tax, audit, and financial institution legal issues, and is a frequent contributor to and currently serves on the Editorial Advisory Board for the ABA Bank Compliance magazine. He has spoken at scores of banking, compliance, and state bar associations, and has conducted training sessions for financial institutions across the country.
Institute of Certified Bankers: Visit http://www.icbmembers.org/login.aspx for instructions regarding self-reporting. Estimated credits: 2.5 CE Credits
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