The Federal Reserve Board has fined Regions Bank, based in Birmingham, Alabama, almost $3 million for failing to ensure that borrowers maintained flood insurance on their properties.
The board did not detail the violations, but a consent order signed this month said that the fines were as much as $2,000 per violation, suggesting that as many as 1,400 loans had not been properly monitored. In addition, Regions failed to effectively monitor “a significant number” of home equity lines of credit for flood insurance protections, deficiencies that were corrected in 2017.
“Over a period of more than one year, as a result of changes in loan servicing platforms and third-party service providers, Regions did not effectively monitor a significant number of home equity loans and home equity lines of credit subject to the Flood Act for compliance with Regulation H,” reads the consent order, dated Aug. 14.
Federal banking regulations require that borrowers with buildings with in FEMA’s special flood hazard area secure flood coverage through the National Flood Insurance Program or through a private insurance provider. The Fed Board has issued about 70 flood-insurance-related enforcement actions around the country in the past 10 years, the board’s information shows.
A Regions official suggested that the $2.95 million in fines all related to issues that the bank itself discovered in years past.
“The issue addressed in the consent order was self-identified by Regions several years ago,” said a statement from Jeremy King, senior vice president at Regions. “We took corrective action and remediated the issue by 2017. There was no customer impact as the matter was confined to our own internal monitoring of flood insurance policies on certain properties.”
The bank, which has operations in 15 states in the South and Midwest, is happy that this aging matter has now been fully resolved, King noted.
Some $58,000 of the penalty will go to the National Flood Insurance Program. Another $2.88 million will be paid to the Federal Reserve System and the U.S. Treasury, the consent order explains.
The Fed Board had cited Regions once before, in 2009, for flood-insurance violations, records show.
A board spokesperson declined to comment on whether the Federal Reserve will step up insurance-related enforcement actions in light of more flooding and expected weather events around the country. US Treasury Secretary Janet Yellen said last month that the recent, extreme weather has exposed an insurance gap for many homeowners.
Was this article valuable?
Here are more articles you may enjoy.
Allstate, Nationwide Post Dramatic Q12024 Homeowners Loss Ratio Drops: S&P 
US P/C Insurers Post Best Q1 Underwriting Result In 17 Years 
German Insurtech Wefox to Replace CEO After Board Rejects Mubadala Sales Plan 
QBE to Non-Renew $500M of North American Mid-Market Biz 
