Pub. 14 2019-2020 Issue 2

Compliance Aid sentence that states that the policy does meet the definition. However, even if the policy does not meet the definition of pri- vate flood insurance under the definition in the rule, the bankmay still accept thepolicy, subject to certain restrictions. Inorder for the bank toaccept thepolicyunder discretionary acceptance, thepolicy must (1) meet the minimum coverage amounts, (2) be issued by a license insurer, (3) include both themortgage or and themortgagee as loss payees, and (4) provide sufficient protection, considering safety and soundness, and the bank can document this in writing. The rule also includes specific requirement related to when a bank may accept a mutual aid society policy under discre- tionary acceptance. In order for the society to be considered a mutual aid society such that the rule would allow the bank to accept the policy, (1) the members of the group must share a religious, charitable, educational or fraternal bond, (2) the group must have an agreement to cover losses due to property damage, including for flooding and (3) the group must have a demonstrated history of fulfilling the terms of the agreements for flooding. Unfortunately, the final rule does not expand on mutual aid societies and new guidance related to the new final rule has not yet been released by the agencies. The bank will need to thoroughly document its analysis and determination regarding any mutual aid society policies. The bank will need to begin looking at these issues and making policy decisions soon, as the final rule is effective July 1, 2019. It applies when a building secures the loan and it is in a Special Flood Hazard Area (often referred to a SFHA, Flood Zone, High Risk Flood Zone, or 100-year plan), even if it is only taken in an abundance of caution during a MIRE event (Making, increasing, renewing or extending). If the building does not secure the loan, it is specifically carved out of the col- lateral or the loan is secured by something else, like a CD, then the flood rule does not apply. If the building is not in a SFHA, then flood insurance is not required, but may be a safety or soundness consideration. If the bank would like to read more about the final private flood rule, Compliance Alliance has a summary of the final rule available in our flood toolkit. Also, in the toolkit is a template flood policy that has been updated for the new final rule, as well as the checklist that was mentioned earlier: https://www. compliancealliance.com/find-a-tool/by-toolkit/flood.  SAVE THE DATE BRANCH INNOVATION FORUM OCTOBER 2 2019 Embassy Suites 1040 P Street Lincoln, NE 68508 RSVP Today! Reserve your spot today by visiting: dbe.financial/branchinnovation.html Private Flood — continued from page 27 Daniela Clark serves as Associate General Counsel for Compliance Alliance. She holds a bachelor’s in Business Administration with a concentration in Management from the University of Texas at Arlington, AACSB. Daniela received her JD from Texas A&M University School of Law and is a licensed attorney in the State of Texas. Daniela brings to Compliance Alliance her knowledge of consumer finance compliance.