Flood Insurance Review & Update
Gain the knowledge needed to avoid frequently cited violations and obtain a positive outcome in flood insurance examinations and the information on Biggert-Waters Flood Insurance Reform Act to assure that compliance programs are updated for the latest developments.
On July 6, 2012, President Obama signed into law the Biggert-Waters Flood Insurance Reform Act of 2012 (Biggert-Waters). Among numerous other provisions, Biggert-Waters re-authorizes the National Flood Insurance Program (NFIP) through 2017.
The bank regulatory agencies are increasing heightened efforts to ferret out violations of the flood regulations. No other aspect of the compliance examination is consistently receiving such close scrutiny. Many institutions have paid penalties. And now the penalties are increasing substantially. Most violations involve a basic misunderstanding of the rules of coverage and other requirements. Common violations involve incorrect completion of the Standard Flood Hazard Determination Form, failure to require flood insurance and the failure to deliver the Notice of Special Flood Hazards.
- Requirements of the Flood Disaster Protection Act including:
- Coverage and exemptions;
- Documentation requirements;
- Form completion; and
- Insurance requirements.
- Interagency questions and answers regarding flood insurance.
- Provisions of Biggert-Waters that:
- Eliminate many subsidies on insurance rates, which means higher premiums for borrowers;
- Increase the maximum penalty for flood violations from $385 per violation to $2,000 per violation;
- Require the lender to terminate the flood insurance it “force places” and issue refunds to homeowners who have their own coverage;
- Increase the coverage available on multifamily structures;
- Expand the requirement to escrow for flood insurance premiums;
- Establish a requirement for minimum deductibles;
- Clarify issues related to flood insurance on condominiums;
- Require a new disclosure related to private flood insurance; and
- Require lenders to accept private flood insurance policies that meet certain requirements.
Loan officers, processors and others responsible for assuring that flood insurance disclosures are provided and that an appropriate amount of insurance is purchased upfront and maintained throughout the life of the loan.
Jack Holzknecht, Pegasus Educational Services, LLC.
Institute of Certified Bankers: Visit http://www.icbmembers.org/login.aspx for instructions regarding self-reporting. Estimated credits: 2.5 hours CRCM/CLBB.
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