FDIC Enters into Consent Order for Payment of Civil Penalties over Bank’s Failure to Follow Flood Insurance Regulations

The FDIC entered into a consent order with a Bank over its failure to follow regulations regarding flood insurance for mortgages that the Bank originated.

The FDIC found that the Bank had engaged in a pattern or practice of violating the Flood Disaster Prevention Act, the National Flood Insurance Act, and related regulations.  Specifically, in connection with certain mortgage loans, the Bank had failed to obtain required flood insurance at the time it originated the loans, failed to obtain an adequate level of flood insurance when it originated the loans, failed to maintain flood insurance, failed to follow procedures for forced placement of flood insurance, and failed to provide borrowers with a required Notice of Special Flood Hazard and Availability of Federal Disaster Relief Assistance when making, increasing, extending, or renewing loans.  The consent order required the Bank to pay a $6,000 civil penalty for the violations.