pulled flood on 5-31-14-purchase commercial property and is in a flood zone, closed loan on 6-2-14 with a binder dated 6-2-14, 30 day waiting period, so on 7-3-14 I asked for complete flood policy, turns out the borrower canceled the 30 day binder between 6-2-14 and 7-3-14. Between 7-3-14 (began my review)and 8-10 I worked with lender to inform customer he needs insurance and also with insurance company.(retained all correspondence indicating he needs flood insurance) So on 8-10-14 starts another 30 day binder. We now have a full year flood policy with correct amounts. Pulling a flood determination so close to loan closing is not our procedure-isolated incident. When examiners review which part of the flood regulations are in violation? I am a little confused, we had a binder at loan closing.

we had a binder at loan closing

A binder is not, and never has been, an acceptable proof of flood insurance. BTW, there is never a 30 day wait period for flood insurance in connection with a new loan.

You closed the loan without proper proof of flood insurance.

No mention of a 45 day letter either. Sounds like $4,000 to me.

dnau - did the customer receive the notice prior to loan origination?

the borrower signed flood determination same day of loan closing so he knew before signing the closing documents. I am referencing page G9 from general rules dated June 1, 2014: No waiting period if it is to initially purchase in connection with making a loan provided the policy is applied for at or before closing provided we have a premium receipt. and application date is on or before loan closing date. What did I miss?

the borrower signed flood determination same day of loan closing so he knew before signing the closing documents

How is that timing sufficient notification of the requirement to obtain flood insurance??? When was the determination obtained by the bank? That may well be another $2,000.

Flip to page GR 15 of the same rules:

D. Evidence of Insurance

A copy of the Flood Insurance Application and
premium payment, or a copy of the declarations
page, is sufficient evidence of proof of purchase for
new policies. The NFIP does not recognize binders.

thanks for input-I actually told them not to go ahead with the loan closing on 6-2-14 but the banker did