After several years, a customer requests that their flood insurance be lowered to their loan's current balance...this is ok as long as we would do this for anyone requesting this.....is that correct??

This is not something that we inform customers that they can do.....I want to make sure we aren't doing something that could be considered unfair....

I assume your bank's policy is to insure at the RCV of the structure. If you make an exception for this customer and lower the required amount of coverage, I would make sure to document the exception to your policy and why the decision was made and keep that in the file. There are fair banking concerns with this, so think of long term effect....what if news of this exception spreads to loan officers or more requests start coming in to lower coverage? How will you track exceptions to ensure there is no disparate treatment?

Yes there are fair lending concerns (as Jade's pointed out) You need to balance this with customer service. Your customer requested it. How do you tell them "no". The regulatory requirement is "lesser of". If the loan balance is paid down and they want less AND you're willing to do it from a Safety and Soundness view, I'd allow it. It's perfectly legal & allowed by regulation. It's a management decision.

Thank you.....we do not have a policy of insuring to the RCV.....