InfoBytes Blog
Filter
Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
Fed issues enforcement actions for flood insurance violations
On April 16, the Federal Reserve Board announced enforcement actions against a New Jersey-based bank and a Virginia-based bank for alleged violations of the National Flood Insurance Act (NFIA) and Regulation H, which implements the NFIA. The consent order issued against the New Jersey-based bank assesses a $28,000 penalty for an alleged pattern or practice of violations of Regulation H, but does not specify the number or the precise nature of the alleged violations. A separate consent order issued against the Virginia-based bank assesses a $5,500 penalty and similarly does not describe the specific alleged allegations. The banks neither admitted nor denied the allegations. The maximum civil money penalty for a pattern or practice of violations of the NFIA is $2,000 per violation.
Fed issues enforcement action for flood insurance violations
On February 6, the Federal Reserve Board (Fed) announced an enforcement action against a Virginia-based bank for alleged violations of the National Flood Insurance Act (NFIA) and Regulation H, which implements the NFIA. The consent order assesses a $9,500 penalty against the bank for an alleged pattern or practice of violations of Regulation H, but does not specify the number or the precise nature of the alleged violations. The maximum civil money penalty under the NFIA for a pattern or practice of violations is $2,000 per violation.
Federal Reserve hits bank for flood insurance violations
On January 30, the Federal Reserve Board (Fed) announced an enforcement action against a New York-based bank for allegedly violating the National Flood Insurance Act (NFIA) and Regulation H, which implements the NFIA. The consent order assesses a $36,500 civil money penalty against the bank for an alleged pattern or practice of violations of Regulation H, but does not specify the number or the precise nature of the alleged violations. The maximum civil money penalty under the NFIA for a pattern or practice of violations is $2,000 for each violation. The consent order was signed by both the bank and the Fed on January 24.
FDIC fines bank for flood insurance violations
On September 27, the FDIC announced its release of a list of administrative enforcement actions taken against banks and individuals in August. According to the press release, the FDIC issued 13 orders, which include “four consent orders; one removal and prohibition order; four civil money penalty orders; two terminations of consent orders; and five section 19 orders.” Notably, the FDIC assessed a civil money penalty against a Texas-based bank for alleged violations of the Flood Disaster Protection Act, including failing to (i) obtain flood insurance coverage on loans at the time of origination, increase, extension, or renewal; (ii) maintain flood insurance coverage for the term of a loan; (iii) follow force-placement flood insurance procedures; or (iv) provide borrowers with notice of the availability of federal disaster relief assistance “in all cases whether or not flood insurance is available under the [National Flood Insurance Act] for the collateral securing the loan.”
Fed issues enforcement action for flood insurance violations
On September 5, the Federal Reserve Board announced an enforcement action against a Nebraska-based bank for allegedly violating the National Flood Insurance Act (NFIA) and Regulation H, which implements the NFIA. The consent order assesses a $37,000 penalty against the bank for an alleged pattern or practice of violations of Regulation H, but does not specify the number or the precise nature of the alleged violations. The maximum civil money penalty under the NFIA for a pattern or practice of violations is $2,000 per violation.
Fed issues two enforcement actions for flood insurance violations
On August 20, the Federal Reserve Board announced enforcement actions against two separate Massachusetts-based banks for allegedly violating the National Flood Insurance Act (NFIA) and Regulation H, which implements the NFIA. The first consent order assesses a $20,000 penalty against the bank for a pattern or practice of violations of Regulation H, but does not specify the number or the precise nature of the alleged violations; the second consent order assesses a $36,000 penalty, while similarly not specifying the number or precise nature of the violations. The maximum civil money penalty under the NFIA for a pattern or practice of violations is $2,000 per violation.
FDIC fines banks for flood insurance violations
On July 26, the FDIC announced its release of a list of administrative enforcement actions taken against banks and individuals in May and June. The list reflects that the FDIC issued 15 orders, which include “one stipulated consent order; three termination of consent orders; five Section 19 orders; one stipulated civil money penalty order; two stipulated removal and prohibition orders; two voluntary terminations of deposit insurance; and one adjudicated civil money penalty order.”
Among other actions, the FDIC assessed a civil money penalty (CMP) against a Wisconsin-based bank for alleged violations of the Flood Disaster Protection Act and National Flood Insurance Act, including, among other things, failing to (i) obtain flood insurance coverage on loans at the time of origination; (ii) obtain adequate flood insurance coverage on loans; (iii) meet escrow requirements for flood insurance; (iv) follow force-placement flood insurance procedures; or (v) provide borrowers with notice of the availability of federal disaster relief assistance when reviewing loans or within a reasonable timeframe.
The FDIC Board also adopted and affirmed an administrative law judge’s recommended decision and issued a CMP against a Louisiana-based bank for alleged violations of the National Flood Insurance Act. The findings stem from a 2015 compliance examination, and included failures to (i) obtain or maintain flood insurance coverage; (ii) obtain sufficient flood insurance coverage; and (iii) properly notify borrowers of coverage discrepancies.
Federal Reserve issues enforcement actions for flood insurance, BSA/AML violations
On May 16, the Federal Reserve Board (Board) announced an enforcement action against a Nebraska-based bank for allegedly violating the National Flood Insurance Act (NFIA) and Regulation H, which implements the NFIA. The consent order assesses a $69,000 penalty against the bank, but does not specify the number or the precise nature of the alleged violations. The maximum civil money penalty for a pattern or practice of violations under the NFIA is $2,000 per violation.
The same day, the Board issued an order of prohibition against a former employee and institution-affiliated party of an Illinois-based bank for allegedly engaging in unsafe and unsound lending practices, including engaging in improper lending practices and failing to implement adequate Bank Secrecy Act/anti-money laundering controls and training. The terms of the order prohibit the individual from, among other things, “participating in any manner in the conduct of the affairs of any financial institution or organization specified in section 8(e)(9)(A) of the [Federal Deposit Insurance Act],” or “voting for a director, or serving or acting as an institution-affiliated party.”
Banking agencies issue final rule on private flood insurance
On February 12, the Federal Reserve Board, Farm Credit Administration, FDIC, National Credit Union Administration, and the OCC issued a joint final rule amending regulations governing loans secured by properties in special flood hazard areas to implement the provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 concerning private flood insurance. As previously covered by InfoBytes, the provisions, among other things, require regulated lending institutions to accept policies that meet the statutory definition of “private flood insurance,” and clarify that lending institutions may choose to accept private policies that do not meet the statutory criteria for “private flood insurance,” provided the policies meet certain criteria and the lending institutions document that the policies offer “sufficient protection for a designated loan, consistent with general safety and soundness principles.” The final rule takes effect July 1.
(See also FDIC FIL-8-2019, NCUA press release, and OCC press release.)
FDIC fines banks for flood insurance violations, releases December enforcement actions
On January 25, the FDIC announced a list of administrative enforcement actions taken against banks and individuals in December. The 15 orders include “two Section 19 orders; one civil money penalty; three removal and prohibition orders; four consent orders; one prompt corrective order; three terminations of consent orders; and one notice.” The FDIC assessed a civil money penalty against an Illinois-based bank for alleged violations of the Flood Disaster Protection Act (FDPA) and the National Flood Insurance Act (NFIA) including failing to (i) obtain flood insurance coverage on loans at origination; (ii) maintain flood insurance; and (iii) “properly force place flood insurance.”
A second civil money penalty was assessed against a Wisconsin-based bank for allegedly engaging in a pattern of violating the FDPA and the NFIA, including failing to (i) follow force placed flood insurance procedures, including notifying a borrower of a lapse in flood insurance coverage and force placing the necessary insurance in a timely fashion; (ii) obtain adequate flood insurance coverage on a loan at origination; and (iii) provide notice to a borrower concerning whether flood insurance under the NFIA was available for the collateral securing a loan.
There are no administrative hearings scheduled for February 2019. The FDIC database containing all 15 enforcement decisions and orders may be accessed here.