On Jan. 21, 2020 the Office of the Comptroller of the Currency (OCC) announced a $17,998,510 civil money penalty (CMP) against Citibank for flood requirement violations. The Flood Disaster Protection Act (FDPA) and its implementing regulations apply to financial institutions including Citibank that make,  increase, extend and renew loans secured by buildings or mobile homes (“Collateral”) located in a special flood hazard area in which flood insurance is available under the FDPA  (“Designated Loans”).  The FDPA also requires covered financial institutions to have a compliance program to monitor its Designated Loans.

Citibank’s compliance program to monitor its Designated Loans was intended to ensure that the collateral securing the Designated Loans was appropriately covered by flood insurance. Citibank used a third-party to service Designated Loans within its residential lending units to notify the borrowers and force place flood insurance when the flood insurance failed to appropriately cover the collateral. The OCC determined in 2017, that since 2014, Citibank’s policies and procedures allowed its third-party servicer to extend the 45-day period after notification to the borrower, resulting in the untimely force placement of flood insurance on Designated Loans.


John Zasada, JD, CAMS – Compliance Consulting Director, Financial Institutions Group. John can be reached at zasada@doeren.com.