Flood Fundamentals

Hurricanes.  Sea swells.  Rainstorms.  Snow melts.  Ice jams.  Any one of these things can cause flooding and substantial damage to your bank’s collateral and your customer’s property.  FEMA, the government agency that exists to help Americans through the worst emergencies, doesn’t have the ability or desire to foot the bill for every Act of God that wreaks havoc on the land.  So they require flood insurance to help manage the risk – through you, the friendly neighborhood banker.  Here's the problem:  Flood compliance is COMPLICATED and INTIMIDATING.  So many rules, so many details, so many fines! Examiners always pay great attention to flood compliance, because more often than not, they find violations… and one problem can sink into several penalties.  No financial institution is immune – if you think you don’t have to worry about flood because you aren’t near the sea – think again! 

The regulatory agencies, recognizing how broad and complex these issues are, began in 1997 to issue Interagency Q&As on the technical requirements of Federal flood insurance laws.  Over the years, the Interagency Q&A have been amended, expanded and updated, with 2022 bringing the most significant updates yet. The 2022 FAQs address major developments that occurred in the flood world since the prior 2011 update.  Not only was there the Biggert-Waters Flood Insurance Reform Act of 2012 and the Homeowner Flood Insurance Affordability Act of 2014, but then FEMA rolled out Risk Rating 2.0.  All three of these actions had a direct impact on the Q&As.

Topics covered in this session

• What properties must be insured
• What loans must be insured
• What can be waived and how
• What exceptions apply
• LOMCs, LOMAs, LOMRs, and LOMR-Fs
• Construction, condos and townhomes – special handling required
• Multiple buildings, multiple policies?
• Buildings that would be better off swept away – worthless / low value buildings
• Manufactured homes – the attachment issue
• Determination fees and the Finance Charge issue
• Ensuring proper coverage amount
• Insurable Value
• Ensuring proper evidence of insurance
• Contents coverage – not to be overlooked!
• Private policies – a whole new world
• Escrowing
• Force-placement
• 144 Flood Q&As and how they help you
• Risk Rating 2.0
• The all important “Kill Switch” that should be bestowed to every employee

Who Should Attend:

• Compliance staff
• Loan administration / production staff
• Mortgage loan staff
• Loan policy makers
• Loan officers and audit staff