ABA Urges Movement on Flood Insurance Guidance

Today ABA commented on the interagency proposed questions and answers issued by the prudential banking agencies earlier this year. ABA recommended that the agencies to make specific changes to many of the 116 Q&As proposed addressing several flood compliance issues, including notice requirements, construction loans, condo and co-op loans, escrow requirements, and force-placed insurance.

ABA also strongly urged the agencies to make clear the supervisory expectations arising from the Q&As, and to clarify that the proposed Q&As are guidance, not regulation. ABA noted that bankers regularly report that “examiners cite flood violations for matters and issues not covered or specifically addressed by the regulations” and that “banks regularly confront examiners who are eager to cite technical errors that do not harm borrowers, negatively impact safety and soundness, or raise the risk of flood loss.”