The Flood Disaster Protection Act represents one area of compliance that can appear straightforward in some regards, but can also be a cumbersome area for institutions to manage, especially when dealing with complex or unique situations. At the core of flood compliance, the financial industry is aware of the general prohibition from making, increasing, extending, or renewing a loan secured by improved real estate or a mobile home located in a special hazard flood area in a community participating in the National Flood Insurance Program, unless the property securing the loan is covered by flood insurance.
To help their supervised institutions comply, the Federal Reserve, FDIC, Farm Credit Administration, NCUA and the OCC have provided Interagency Q&As regarding flood insurance, which were recently updated in May 2022. One of the significant topics addressed by the flood Q&As relates to force placement procedures. Keep in mind that the Q&As do not represent regulatory changes; however, they contain guidance that will assist lenders in meeting their flood compliance responsibilities. So, how do the Flood Q&As address force placement? Well, the May 2022 issuance contains 16 Q&As on the topic, which indicates that specific, focused guidance on force placement is needed. In this Compliance “Quick Bite”, Rhonda Coggins, CRCM, National Compliance Services Director at Sheshunoff Risk Management shares some highlights from the Force Placement section in the updated Interagency Flood Q&A’s and provides a more detailed discussion of Q&A Force Placement 10.