We participated in BOL's two part webinar on flood insurance, but didn't get the chance to pose this question. Per the flood regulations, the bank can not close a loan without adequate flood insurance. If the applicant refuses to buy flood insurance, but otherwise meets our credit standards, do we deny the loan? What reason do we put on the adverse action notice? Or is there another "action taken" that would be more appropriate? In this case, we know up front that the applicant has refused to buy the required flood insurance. He was not aware that the property required it, until we notified him.

You deny the loan for the failure to provide adequate flood insurance.