Civil Money Penalties are on the Rise in 2025 for Flood Disaster Protection Act Violations
Written by: Rob Ellis, Senior Compliance Consultant
The year is only half over yet already 11 institutions have been assessed civil money penalties for violations of the Flood Disaster Protection Act. That equals the total of Flood CMPs issued for all of 2024.
Regulators issue civil money penalties on financial institutions for a pattern or practice of making, increasing, extending or renewing loans in a special flood hazard area in which flood insurance is available under the national flood insurance act of 1968. Recent penalties included the following violations of 12 C.F.R. Part 339:
Failing to obtain flood insurance on a building securing a designated loan at the time of the origination.
Failing to obtain adequate flood insurance (including contents).
Failing to follow force placement flood insurance procedures.ment.
Failing to require the escrow of all premiums and fees for required flood insurance when it required the escrow of taxes, insurance premiums, fees, or any other charges for a loan secured by residential improved real estate.
Failing to provide borrowers a notice of special flood hazard and availability of federal disaster relief assistance; and
Failing to provide borrowers a notice of special flood hazard and availability of federal disaster relief assistance within a reasonable time before the completion of the transaction.
Did you know that if an institution is found to have a pattern or practice of committing any of these violations, the Agencies are required to assess civil money penalties in an amount not to exceed $2,000 per violation.
SCA’s compliance team conducts comprehensive Flood training, policy and program reviews, and targeted compliance monitoring reviews using 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.
