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Flood Compliance in the Commercial Portfolio
Commercial loans secured by improved real estate are covered by the flood hazard insurance requirements. The flood insurance provisions apply to any structures that could be damaged by a flood. The goal of the flood hazard insurance program is to reduce disaster recovery claims to the federal government.
Flood insurance should be a priority for commercial loans because many businesses are often located on sites considered unsuitable for residential development - because of floods. When customers object to flood insurance, it can be useful to remind them of the risk and to point out that federal disaster recovery is a loan -not a gift. Moreover, a property owner may only receive disaster assistance once. When the second flood comes, they're on their own.
The Federal Reserve Board maintains a "regulatory review project. It periodically reviews its regulations to update and simplify them. Recent changes to Regulation D are the result of this type of review.
Scheduled for review in the near future are Regulations B and C. Equal Credit Opportunity and Home Mortgage Disclosure will be studied for provisions that are now obsolete. More important, they will be studied for ways that the regulations can be modified to facilitate compliance while carrying out the statutory purpose. One possible area for this review to improve would be the collection and reporting of government monitoring data. With both regulations that contain these requirements under review at the same, there is opportunity to resolve some nettlesome differences between the regulations. Sharpen your pencils!
Copyright © 1997 Compliance Action. Originally appeared in Compliance Action, Vol. 2, No. 5, 4/97
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