Revised Interagency Examination Procedures for the Flood Disaster Protection Act

By Neil Bloomfield. The Task Force on Consumer Compliance of the Federal Financial Institutions Examination Council (FFIEC) recently published the modified interagency examination procedures for the Flood Disaster Protection Act (FDPA) designed to promote consistency and communication of supervisory expectations in the examination process. The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Farm Credit Administration, and the National Credit Union Administration issued amendments to regulations governing loans secured by property in flood zones covered by the Biggert-Waters Flood Insurance Reform Act of 2012 (Biggers-Waters Act). These amendments became effective on July 1, 2019.

The revised examination procedures give an indication of how these amendments will be incorporated.  These procedures cover the examinations of all national banks, federal savings associations, and federal branches and agencies of foreign banking organizations. The interagency procedures reflect regulatory provisions that:

  • require a regulated lending institution to accept private flood insurance policies that meet the definition of “private flood insurance” in satisfaction of the flood insurance purchase requirement;
  • include a compliance aid to facilitate a regulated lending institution’s determination that a policy meets the definition of “private flood insurance”;
  • permit a regulated lending institution to exercise its discretion to accept a flood insurance policy issued by a private insurer that does not meet the definition of “private flood insurance,” subject to certain restrictions; and
  • permit a regulated lending institution to exercise its discretion to accept flood coverage provided by a mutual aid society, subject to certain restrictions.

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