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Flood Insurance Is Serious Business
The bank regulatory agencies are taking flood hazard insurance very seriously. Failures in flood hazard certification may result in a less than satisfactory compliance rating - all by themselves. That's how much this matters.
To understand the priority placed on flood insurance, all you have to do is read the news. After the drought of the century, the East Coast (where Congress and FEMA are located) has been drenched with flooding rains.
Your compliance reviews should look for timely certification for all loans secured by improved real property - including commercial loans. Also check to determine that the amount of insurance purchased is adequate. This can be particularly tricky in commercial loans when the property securing the loan may be changed or the amount of the loan may fluctuate.
Copyright © 1999 Compliance Action. Originally appeared in Compliance Action, Vol. 4, No. 12, 11/99
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