FDIC Penalizes Two Banks for Flood Insurance Violations
The FDIC recently assessed civil money penalties against a Michigan-based and a Wisconsin-based bank for allegedly violating the Flood Disaster Protection Act and the National Flood Insurance Act. Specifically, the FDIC assessed civil money penalties against banks for allegedly:
- Failing to obtain flood insurance at origination, and failing to maintain adequate flood insurance.
- Failing to properly force place flood insurance.
- Failing to provide notice to borrowers that the collateral for a loan was in a designated special flood hazard area.
- Failing to obtain flood insurance on a building securing a designated loan at the time of origination.
- Failing to provide to borrowers a Notice of Special Flood Hazard and Availability of Federal Disaster Relief Assistance in a timely manner.
The enforcement actions require the Michigan-based bank and the Wisconsin-based bank to pay civil penalties in the amount of $14,800 and $5,000, respectively.
The violations cited in the enforcement actions involve a small number of loans. For example, the FDIC cited the Michigan-based bank for failing to properly force place flood insurance in two instances. Similarly, the FDIC cited the Wisconsin-based bank for failing to provide borrowers a Notice of Special Flood Hazard and Availability of Federal Disaster Relief Assistance in a timely manner on five loans. Such enforcement actions indicate that the FDIC is closely evaluating compliance with the Flood Disaster Protection Act and the National Flood Insurance Act.
