Flood violations can sneak up on financial institutions. Underlying risks are often not readily apparent until a triggering event occurs that makes everyone pay attention, like a change in flood maps or regulation or in how existing requirements are enforced. With this in mind, a new flood risk has come to light, which involves cross-collateral clauses in mortgages and deeds of trust, has recently been identified by examiners as causing loans to be underinsured as to flood insurance.
In this “Compliance Quick Bite”, our Compliance Consulting Director, Edward Milhorn, covers what cross-collateralization is and what you can do to determine its impact for your institution.
