The longer you’ve been in compliance, the more you understand that nothing seems to stay the same. Between new regulations and new interpretations of old regulations, change is inevitable.
We experienced this recently when our Team was discussing flood insurance coverage documentation. We often get the question of whether a bank should keep copies of all policies for the life of the loan (to prove continuous coverage) or should they keep only evidence of coverage at closing and the current policy? We had been in the camp of the latter (see our 1/21/08 blog); however we have changed our tune.
We now believe it is prudent to keep evidence of flood insurance coverage from the date of loan closing for the entire life of the loan. This is not necessarily based on a change in the regulatory requirements or the now rescinded FEMA Guidelines but the Biggert-Waters Flood Act, does impose much stiffer violations for flood compliance. If you can save a few extra pieces of paper and eliminate civil money penalties, we think it’s worth it.