We have two flood vendors that we use, both of them state that they will notify the bank within 60 days of their receipt of a map change from FEMA. Our examiner recently stated he thought 30 days was too long and 7 would be better. (This was before we discovered the SLA was 60 days.)

Before we go back to the vendor, does anyone else have service levels better than 60 days?

That is two months of premiums a borrower may be paying if his property is no longer in a flood zone and two months of exposure for the bank if the property is now in a flood zone.

Appreciate any comments.

Since life of loan is not required by the regulation, why does your examiner care when they notify you? 60 days is typical.


"That is two months of premiums a borrower may be paying if his property is no longer in a flood zone"

As far as that statement, the borrower would be eligible for a refund from NFIP back to the date of the change.

I see 30 - 60 days all of the time. Most say 60 but act more quickly.

What you have is an examiner that is inputting their personal opinion into a contractual issue & industry standard in which they have no business. Ask the examiner if their regulatory agency has a formal opinion letter they could reference so you can take it to the vendor and/or senior management.

Here's some things to consider:
1. As Randy states, the borrower is going to get a refund. They also had protection during that time. Floods don't follow map lines, so there's still a risk of flooding and the borrower can get a refund even though they had insurance protection during that time.

2. If the map changed, the borrower may have known. These are usually well publicized. The borrower could have learned themselves and notified the bank.

3. The agent may have know too. Shouldn't the agent notify their customers about a change in the map concerning their customers (your borrower).

4. Understand the vendor is probably monitoring thousands or hundreds of thousands of properties and map changes. Seven days?!?

Thanks guys, I appreciate the comments.

I think our examiner was just making a comment, it is not anything official.

I guess since we (banks) are expected to monitor hundreds of thousands of customer transactions on a daily basis for fraud and BSA, it should be a piece of cake for these vendors to monitor their portfolio of properties. <wink wink>

Thanks again.