The writer omits one essential element: Change the federal laws for mandatory purchase of flood insurance in such a way that encourages greater adoption of private insurance when it is offered. Banks are stuck between a rock and a hard place, forced to require borrowers to obtain insurance but restricted by regulators from being too flexible about what might be considered acceptable. There’s a current push for banks to establish “discretionary” protocols for review and acceptance of non-NFIP coverage, but the environment is vague enough that most are afraid to implement such a discretionary approach because the OCC can slap fines on banks too easily.
The writer omits one essential element: Change the federal laws for mandatory purchase of flood insurance in such a way that encourages greater adoption of private insurance when it is offered. Banks are stuck between a rock and a hard place, forced to require borrowers to obtain insurance but restricted by regulators from being too flexible about what might be considered acceptable. There’s a current push for banks to establish “discretionary” protocols for review and acceptance of non-NFIP coverage, but the environment is vague enough that most are afraid to implement such a discretionary approach because the OCC can slap fines on banks too easily.