OCC Fines Bank Almost $18 Million for Untimely Force Placement of Flood Insurance

On January 21, 2020, a large national bank entered into a consent order with the OCC, agreeing to pay a civil money penalty of $17,998,510 for failing to timely force place required flood insurance for borrowers.

The bank used a third party servicer to notify borrowers and force place flood insurance where the collateral properties were not adequately covered 45 days after notification.  Of note, the OCC found that the bank’s policies and procedures allowed the third party servicer to extend the 45-day period after notification to the borrower, which resulted in untimely force placement of flood insurance.  Although the bank agreed to the penalty, it did not admit or deny the OCC’s findings.