Civil money penalties appear to be on the rise for Flood Disaster Protection Act violations
Written by: Rob Ellis, Senior Compliance Consultant
Why This Matters: Recently, several Banks have been assessed civil money penalties (CMP) by the FDIC and Federal Reserve in relation to a pattern or practice of violations of the Flood Disaster Protection Act.
Did you know that MANDATORY civil money penalties must be assessed when a pattern or practice of violations of any of the following requirements of the Flood Disaster Protection Act and its implementing Regulation are cited during an Examination:
Purchase of flood insurance where available (42 U.S.C. 4012a(b));
Escrow of flood insurance premiums (42 U.S.C. 4012a(d));
Failure to provide force placement notice or purchase force-placed flood insurance coverage, as appropriate (42 U.S.C. 4012a(e));
Notice of special flood hazards and the availability of Federal disaster relief assistance (42 U.S.C. 4104a(a)); and
Notice of servicer and any change of servicer (42 U.S.C. 4104a(b)).
The Act provides that any regulated lending institution found to have a pattern or practice of violations “shall be assessed a civil penalty” by its Federal supervisory agency in an amount not to exceed $2,577 per violation (42 U.S.C. 4012a(f)(5)). There is no ceiling on the total penalty amount that a Federal supervisory agency can assess for a pattern or practice of violations.
Recently the FDIC and Federal Reserve have assessed CMPs on several Bank’s ranging from $1,500 to $447,125! Last August the Federal Reserve assessed a $2,945,500 civil money penalty.
SCA’s compliance team conducts comprehensive Flood reviews modeled straight from the Federal Agencies Regulatory Exam procedures.
If you would like to discuss SCA conducting a flood review to ensure you avoid possible exam issues, please contact our Director, Bill Dolan, at WDolan@scapartnering.com or by phone at (617) 694-2617 and schedule a time to speak with us today.
