Just verifying that a property in the flood zone must have flood insurance maintained on it even though the bank is the owner due to foreclosure.

From the now defunct "Mandatory Purchase of Flood Insurance Guidelines":

Lender Responsibilities:

The statutory requirements apply when improved real property (that is, a building) or manufactured (mobile) home is taken as security for a loan.

Is there a loan? You stated the Bank owns the property now due to foreclosure. If the property in the SFHA is now OREO, it is a bank asset, so your obligation to have flood insurance comes from a safety and soundness perspective, not compliance.

Just sayin'.

I agree. The bank is not required to maintain flood insurance on OREO property, although from a S&S perspective it would be advisable.