Mortgage lender joins a host of others fined over flood insurance
The civil money penalty that First Interstate Bank in Billings, Montana is paying to resolve alleged federal flood insurance violations adds to an ongoing trickle of enforcement actions in this area.
The $70,000 fine by the Federal Reserve Board of Governors addresses what it claimed was a “pattern or practice” in which the bank neglected responsibilities it had for coverage.
The fine is in line with reports that regulators have remained active this year in enforcing lenders’ and servicers’ responsibilities for tracking, ensuring coverage and providing notifications related to mortgaged properties in special flood hazard zones.
“We’ve seen numerous violations with significant civil money penalties being assessed,” Dean Stockford, president and CEO of financial services advisory firm M&M Consulting, said during a June podcast hosted by Len Suzio, president of GeoDataVision.
Areas where Stockford said he’s seen shortcomings are in proof of receipt and the amount of required coverage. Ordering flood zone determinations early enough in the process to provide notification within timelines regulators consider acceptable also has been a concern.
Other financial institutions that have entered into consent orders with the Fed’s board to resolve alleged flood insurance violations in recent years include Regions Bank in Birmingham, Alabama, which paid a fine of nearly $3 million in 2023, and Select Bank in Forest, Virginia, which agreed to pay a $9,600 civil money penalty in February.
Just before the onset of the pandemic in 2020, Citibank agreed to pay a nearly $18 million fine for violations of the Flood Disaster Act in an Office of the Comptroller of the Currency enforcement action.
