Pub. 14 2019-2020 Issue 2

NEBRASKA BANKERS ASSOCIATION 27 Flood toolkit that may be helpful to the bank: https://www.compliancealliance. com/find-a-tool/by-toolkit/flood. Unfortunately, the final rule does not specifically address when the Compliance Aid sentence is not 100% correct or varies from the sentence in the rule. However, it would be most conservative to not rely on the sentence if it is not 100% correct or varies from the sentence in the regula- tion. It would be most conservative to go through the policy to be sure that it meets the definition of private flood insurance as it is defined in the rule. The final rule also does not address the situation where the Compliance Aid sentence is in the policy as it is written in the rule; however, immediately after the Compliance Aid sentence, the policy contradicts the sentence in such a way that it makes it clear to the bank that the policy does not meet the definition of private flood insurance. Again, it would be most conservative to not rely on the sentence if it is not 100% correct. It would be most conservative to go through the policy and document exactly why the policy does not meet the definition of private flood insur- ance as it is defined in the rule. One question that we have gotten on the hotline quite a bit is if the bank may review the policy to determine if it meets the definition private flood insurance, even if it does contain the Compliance Aid sentence. There is not a prohibition in doing that. However, there is a pos- sibility that the sentence could be there, the bank goes through the policy, and then finds that the policy in fact does not meet the definition of private flood insurance, in which case the bank can deny it. However, the bank would want to thoroughly document this practice in the bank’s internal policy and procedures as well as in the loan file regarding why the bank found that the policy did not meet the definition of private flood insur- ance even though the policy included the Private Flood — continued on page 28 The final rule also does not address the situation where the Compliance Aid sentence is in the policy as it is written in the rule; however, immediately after the Compliance Aid sentence, the policy contradicts the sentence in such a way that it makes it clear to the bank that the policy does not meet the definition of private flood insurance.