Flood Insurance Compliance Three-Hour Remote Session

Recorded: July 24, 2025
Presented by: Kylee Durbin, Manager, Forvis Mazars, LLP

The Flood Disaster Protection Act mandates that lenders require flood insurance on loans secured by properties located in a flood hazard zone.  In 2024, the regulatory agencies issued several civil money penalties in connection with identifying patterns and practices of violations of the Act. These penalties can be costly to an organization and reveal weaknesses in your compliance management program.

Why have some organizations faced challenges in complying with flood insurance-related rules.

• The flood insurance rules cover a number of business lines at a bank, such as residential real estate loans, commercial loans, agricultural loans and home equity lines of credit.
• Compliance with flood insurance requirements covers the life cycle of a loan, from application to origination to servicing.
• The rules can be confusing and vague, causing more questions that have no clear or easy answers. The revised Interagency Questions and Answers are helpful, but can cause more questions themselves!

This three-hour session will provide a discussion of the fundamental obligations that financial institutions have with complying with the flood regulations, including making the determination of whether flood insurance is required, notification requirements, how much insurance is required, force-placement, the detached structure exemption, escrow, and notice requirements. We will also address the areas that perhaps give you the most trouble – the issues that you may have always had as well as aspects of the private flood insurance rule and how it may be difficult.

This session can support you in reviewing and enhancing your current flood insurance program.

HERE IS WHAT YOU WILL LEARN: 

• Definition of building; Eligibility
• The significance of capitalizing premiums
• The “newer” rules: private flood insurance, escrow
• Construction loans – eligibility; when to require evidence; escrow
• Determinations – relying on previous determination; renewals; multiple buildings
• Timing of notice
• The importance of a LODR/LOMA/LOMR
• Calculation of required insurance
  • What is insurable value?
  • Multiple buildings; Contents coverage
  • HELOCs; Subordinate liens
  • Residential Condominium Assoc Policies (determining sufficiency)
• Requiring supplemental flood insurance
• Low value buildings
• Evidence of insurance; Resolving deficiencies
• Cancellations/Renewals
• Force-placement/Problem with Blanket Coverage