Flood Insurance: Diving Deep on Calculations and Timing Requirements

Flood insurance compliance continues to cause challenges as evidenced by agency-issued compliance examination exceptions and the assessment of civil money penalties. Join us as we review the coverage requirements, explain how to calculate the minimum flood insurance amount, and explain the critical timing requirements of the Flood Disaster Protection Act.

Flood compliance causes institutions to be assessed civil money penalties for violations of the Flood Disaster Protection Act (FDPA), even though the basic regulatory requirements have remained the same for a number of years. Bottom line, adequate flood insurance is required to be in place when a MIRE (Make, Increase, Renew, or Extent) event occurs and the structure securing the loan is located in a special flood hazard area.

And on top of that, if the borrowers drop their flood insurance, your institution must force-place flood insurance in a timely manner. It’s critical that your institution makes accurate calculations and monitors timing requirements to ensure compliance with this regulation!