Flood Disaster Protection Act: Flood Hazard Determination Practices

As of October 30, 2013, this guidance applies to federal savings associations in addition to national banks.*

Through its examination and other supervisory activities, the Office of the Comptroller of the Currency (OCC) has identified two concerns regarding certain practices relating to flood hazard determinations that may expose national banks to compliance and operational risks.  The OCC is issuing this bulletin to inform national banks of its concerns.

The OCC discovered that some companies that provide flood determinations to national banks are not using the Community Status Book (CSB) when obtaining community status information for their flood determinations.  Instead, these entities rely solely on the information available through Flood Map Status Information Service (FMSIS), the Federal Emergency Management Agency’s (FEMA) electronic flood data that is provided to subscribers on a monthly basis.  This also may be a problem for national banks that are performing determinations for their own portfolio.  FEMA has indicated that the CSB is the final authority for community status information and that the community status information in FMSIS may not always be current.  If an entity making a flood determination fails to rely on the CSB when obtaining community status information for flood determinations, the entity could make incorrect flood determinations, which in turn, could expose national banks and their customers to a risk of financial loss.  Therefore, the OCC strongly encourages national banks to review their third-party vendor relationships and their own practices and procedures to ensure that appropriate information is used when performing flood determinations.

The OCC also discovered that some flood determination companies do not note on the Standard Flood Hazard Determination Form that they have revised or updated its determination.  This also may be a problem for a national bank that is performing determinations for its own portfolio.  If the entity revising or updating the form does not record the revised or updated date, the bank may not be able to determine or track compliance with the regulation.  The OCC recommends that flood determination companies and national banks indicate any dates of revision in the "comments" section of the Standard Flood Hazard Determination Form, when a determination has been revised or updated.

This information has also been communicated to the National Flood Determination Association and Federal Emergency Management Association for incorporation into their guidance and communications.

You may direct any questions to your supervisory office or OCC Compliance Division (202) 649-5470.

Ann F. Jaedicke
Deputy Comptroller for Compliance Policy

* References in this guidance to national banks or banks generally should be read to include federal savings associations (FSA). If statutes, regulations, or other OCC guidance is referenced herein, please consult those sources to determine applicability to FSAs. If you have questions about how to apply this guidance, please contact your OCC supervisory office.