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#1903989 - 03/10/14 06:02 PM Bank Required to have Written Policy on Flood
complygirl Online
Platinum Poster

Registered: 10/29/04
Posts: 786
Loc: midwest
Is a bank required to have a written policy regarding compliance with the flood disaster protection act requirements? If so, where is the requirement outlined in the regulation/act? Thanks.

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Flood Compliance
#1903999 - 03/10/14 07:08 PM Re: Bank Required to have Written Policy on Flood [Re: complygirl]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 49447
Loc: Galveston, TX
Not that I am aware of. Sufficient written procedures would probably suffice.
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The opinions expressed are my own, take them or leave them.

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#1912082 - 04/04/14 06:07 PM Re: Bank Required to have Written Policy on Flood [Re: complygirl]
Princess of Power Online
Gold Star

Registered: 08/23/02
Posts: 376
Loc: Napa, CA
I would agree totally with Randy and that has been how I've rolled for over 20 years - no policy, just strong procedures and monitoring. Just received MRA from OCC for lack of policy. Guess I get to write one now.

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#1912090 - 04/04/14 06:24 PM Re: Bank Required to have Written Policy on Flood [Re: complygirl]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 49447
Loc: Galveston, TX
Just received MRA from OCC for lack of policy.

Unless your institution was also cited for flood compliance weaknesses, my first call would be the ombudsman asking them to help procure a citation that indicates the lack of a flood insurance policy (when you have no choice in compliance) is a requirement. Board and management policies are to establish how a bank is going to handle something in which there are options. If there are no options, then you might call it a policy, but it will be nothing but procedures unless you plan on just having the board pass a policy that reads like the regulation.
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The opinions expressed are my own, take them or leave them.

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#1912101 - 04/04/14 07:44 PM Re: Bank Required to have Written Policy on Flood [Re: complygirl]
Kathleen B Online

10K Club

Registered: 12/27/00
Posts: 17126
Or "We will comply. Refer to procedures."
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Kathleen Blanchard CRCM "Kaybee"
CRA/HMDA Maps,Analysis,Consulting,Geocoding,Compliance Services

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#1912126 - 04/07/14 08:36 AM Re: Bank Required to have Written Policy on Flood [Re: Kathleen B]
Sinatra Fan Online
Power Poster

Registered: 07/19/02
Posts: 5328
Loc: New Jersey
A few years ago, the OCC cited us for not having a written flood compliance policy. They acknowledged that our procedures were fine, they could find no violations, and we were doing everything that we were supposed to be doing, but we needed to have a written policy.

I asked the examiner if we were required to have a specific written policy for each of the "alphabet regulations", and why we needed a policy if the exam team itself admitted that our procedures were working. He was not at all pleased with my questions.

We wrote a flood policy.

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#1912132 - 04/07/14 09:09 AM Re: Bank Required to have Written Policy on Flood [Re: complygirl]
RR Joker Offline
10K Club

Registered: 11/15/02
Posts: 16271
Loc: The Swamp
See now that just chaps my cheeks. Unless a policy is specifically required, having one for the sake of having one is just ridiculous. Good procedures is a different story.
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#1912155 - 04/07/14 09:41 AM Re: Bank Required to have Written Policy on Flood [Re: RR Joker]
Sinatra Fan Online
Power Poster

Registered: 07/19/02
Posts: 5328
Loc: New Jersey
I absolutely agree. Unfortunately, I was the only member of senior management that wanted to challenge the demand, and I was told to get the policy written ASAP.

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#1912444 - 04/07/14 05:30 PM Re: Bank Required to have Written Policy on Flood [Re: complygirl]
Cornhusker Offline
Gold Star

Registered: 03/25/11
Posts: 320
Loc: SE, Nebraska
I don't think the Law or regulation stipulates that you have to have either - policy or procedures. A quick look at our Consultant's lending manual also indicates a lack of text stipulating a federal requirement for such. I'm not saying it is a bad idea, but I'd be arguing this one. The problem with Flood compliance is not a lack of policy or procedures, it's the law itself. It's so convoluted and poorly written that alot of it comes down to opinion - thus regulators and their varied opinions we see.

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#1912446 - 04/07/14 05:33 PM Re: Bank Required to have Written Policy on Flood [Re: complygirl]
Kathleen B Online

10K Club

Registered: 12/27/00
Posts: 17126
Some banks have various "policy statements" in their compliance program, such as one on Flood. The policy statement might include some high level statements such as responsibility for various steps, no waivers ever, etc. Nothing lengthy, and a reference/link to procedures. I have not seen that criticized, but I have not been to every bank.
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Kathleen Blanchard CRCM "Kaybee"
CRA/HMDA Maps,Analysis,Consulting,Geocoding,Compliance Services

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#1912590 - 04/08/14 10:28 AM Re: Bank Required to have Written Policy on Flood [Re: complygirl]
Cornhusker Offline
Gold Star

Registered: 03/25/11
Posts: 320
Loc: SE, Nebraska
That's what we have Kathleen - high level language saying we will comply with this and that. It basically acknowledges that we have an egg to cook, but we are not required to explain how we are going to cook it.
Last year we had an examiner state in the outbrief that they could find no flood damage (get it?), in our files. But then added an off-hand remark that they would have issued an "MRA for failure to have flood procedure documentation" if they had found one violation. I about came unglued, but kept my mouth shut. This, without any discussion about their opinion on why they thought we should have procedures. No discussion. I just let it go and started getting ready for the next exam.

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#1912593 - 04/08/14 10:36 AM Re: Bank Required to have Written Policy on Flood [Re: complygirl]
John Burnett Online
10K Club

Registered: 10/27/00
Posts: 30086
Loc: Cape Cod
I strongly believe in written procedures, particularly with the complexity of compliance with flood insurance requirements. Well-written procedures provide credibility as to your process, uniformity of the process, and a good training tool for the inevitable newbie to the process.

But the only "policies" that I think are necessary in this area are those covering the real estate securing your loan portfolio.
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John S Burnett
BankersOnline.com

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