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WBK Industry News - Federal Regulatory Developments

FDIC Imposes Penalties for Flood Insurance Violations

The FDIC has issued consent orders assessing civil money penalties against two banks for engaging in patterns or practices of violating the Flood Disaster Protection Act.

The FDIC alleged that the first bank violated the Flood Disaster Protection Act (FDPA) on hundreds of occasions by failing to notify borrowers that they should obtain flood insurance, at the borrowers’ expense, in an amount at least equal to the amount required for the remaining term of the loan.  The bank also failed to force-place flood insurance where the borrower failed to obtain flood insurance within 45 days after notification.

The FDIC also alleged that the second bank violated the FDPA in a smaller number of transactions.

The first bank was assessed a civil money penalty of $153,850, and the second was assessed a civil money penalty of $7,200.

For more information, copies of the consent orders can be found here:

https://www5.fdic.gov/EDOBlob/Mediator.aspx?UniqueID=e66d7a3d-4984-401f-9ce6-5f43a0c6ba27.

https://www5.fdic.gov/EDOBlob/Mediator.aspx?UniqueID=8b16683d-a7ba-4b19-b725-b2b85785e1c8.