All in Flood

The Federal Financial Institutions Examination Council recently (8/22/19) updated their Flood Exam manual to reflect the new requirements for mandatory acceptance of private flood insurance. Mandatory acceptance of private flood insurance was mandatory in July of 2019. If your organization is looking for more information on this now required rule, be sure to take a look at our premium course on private flood insurance at Read more on this article to get a link to the updated exam procedures.

Overview of New Private Flood Insurance Rules

In this Compliance Clip (video), Adam provides an overview of the new rules that require the mandatory acceptance of certain private flood insurance policies. This rule must be followed by July 1, 2019, so financial institutions must ensure they soon have a full understanding of this new rule.

For those looking for in-depth training on the new private flood insurance rule, be sure to check out our Compliance Class on this topic in our store at

On June 3, 2019, Congress extended the National Flood Insurance Program for another four months, through the end of September, 2019. This marks the twelfth temporary extension of the flood program within the last two years. As we have noted before, this large number of temporary extensions signal a desire by Congress to make long-term changes to the program. This, of course, should be an advance notice to compliance professionals that future changes with flood insurance rules are highly probable.

For the eleventh time since 2017, Congress extended the National Flood Insurance Program on May 30/2019 by another two weeks. The flood Program, which was set to expire on June 1, is now extended through June 14, 2019 meaning that new flood insurance policies can be issued and real estate transactions won’t be delayed during this time. This two week extension provides

When the guidelines for the detached structure exemption from flood insurance were first announced, many jumped for joy.  Over the years, many of customers and lenders alike have argued that flood insurance shouldn’t be required for certain detached structures, though flood insurance rules have traditionally required flood insurance for any collatoralized structure located in a high-risk flood zone, regardless of whether or not it was a residence, commercial building, or storage shed.  So, when the Homeowners Flood Insurance Affordability Act of 2014 provided for an exemption for flood insurance for certain detached structures, many were excited to quickly use the detached structure exemption to avoid flood insurance.

Unfortunately, many soon realized that the detached structure exemption couldn’t be used for every detached structure that was not a residence.  In addition, some ambiguity in the rules left many wondering which structures could actually qualify for the detached structure exemption. For example, one of the main questions we continue to see is this: Can detached structures on investment properties still qualify for the exemption from obtaining flood insurance?

While flood insurance compliance is extremely important due to potential fines and penalties, the rules can be quite confusing and cumbersome for both customers and financial institutions.  For example, when a structure is found to be in a high-risk flood zone, flood rules require that a flood notice be sent to the applicant advising them of being in a flood zone, their responsibilities for obtaining insurance, and a few other disclosures.  These rules, however, don’t provide time-frames on when, exactly, the flood notice must be delivered. Therefore, there has been quite a bit of confusion over the timing requirements of the flood notice that must be delivered to borrowers who have a collateralized structure in a high-risk flood zone.

On January 25, 2019, the joint agencies issued a final rule requiring lending institutions to accept “private flood insurance.”  This long-awaited rule was mandated by the Biggert-Waters Act and went through two different proposals. One of the biggest challenges the new rule could have created relates to how lenders will determine whether a private flood insurance policy is considered to be in compliance and, therefore, acceptable.  To alleviate this challenge, the final rule provides a…