The U.S. government tasks the banking industry with verifying that all bank clients are in compliance with the flood insurance requirements of the Flood Disaster Protection Act (FDPA), a seemingly straight forward task.  However, the largest banks in the US have tremendous difficulty in applying the FDPA to commercial properties given the complexity of the transactions.


Our client, one of the largest banks in the U.S., received a Cease & Desist Order demanding immediate review and remediation of their policies and procedures for flood insurance compliance. This particular client participated in financing some of the largest and most complex real estate transactions in the world and simply understanding the collateral of a particular loan was not a straightforward task.


Because of the tremendous increase in compliance due diligence required and the complexity of their portfolio, the bank turned to the specialists.  They engaged the Banking & Regulatory Solutions (BRS) to provide an expert project management and execution team for their Flood Department overhaul.


The BRS's staff of real estate credit experts were used to support the flood department’s daily work volume during the overhaul. The client originally requested 20 BRS team members assigned to a single line manager.  However, after one month of the BRS’s teams involvement, the client identified the exponential lift by BRS’s resources and requested additional staffing to include 120 individuals. These professionals were assigned to various tasks and line managers and were spread out between new originations, annual renewals, quality control, map ins/outs, reporting, forced placed insurance and borrower refunds.  Due to the breadth of our involvement we were able to provide invaluable feedback to bank executives to further refine their departmental overhaul.


In addition, the BRS team was asked to lead a separate initiative to audit the entire existing portfolio of commercial real estate collateral to verify compliance across the entire department.  As is common with banks of this size, our client did not have a comprehensive and accurate list of all real estate collateral securing their portfolio.  Our task consisted of reviewing available documentation, verifying & collecting all property level information, and re-indexing all pertinent documents within the client document repository.


When the project was finally concluded, the BRS team had provided supporting resources for 18 months. During that time, the team reviewed the entire existing commercial real estate portfolio, including all new originations, resulting in over $500 billion in commercial real estate assets processed. While the client was originally given a Cease & Desist Order for their flood department, after only 10 months of the BRS teams involvement, the Cease & Desist Order was lifted.  In addition, the OCC did not issue a regulatory fine which is a rare outcome in this scenario.