[dcsluder1]

I haven’t saw or read anywhere, if we deny a flood policy after June 1, is there a form letter? Used for denials? If not, should we customize a letter? If so, does anyone know what verbiage needs to be in it?

[rcooper]

There is not a required letter for not accepting a private flood policy. Your loan staff needs to be able to have conversations about the requirements with their customers. Each time your bank makes a determination on a private flood policy, you should document your files of the status (i.e. does it meet the definition of private flood insurance which requires you to accept the policy or does it not meet the definition of private flood insurance at which point you may decide to accept it under the discretionary rule if it meets the criteria outlined in the regulation).

Although not required, a letter would provide nice customer service and would also serve as documentation for your file. As for what to include, the essential item would be to explain that this is a designated loan for which flood insurance is required (outline requirement) and state that a private policy may be acceptable if it meets the definition of “private flood insurance” (may include the definition) as outlined in the flood regulations (insert citation) issued by (insert bank’s regulator); however, the policy presented does not qualify as private flood insurance under (include citation) and as a result, your bank will not accept the policy…

Let us know if you have any other questions.

[Author]

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