M&T Bank fined for flood insurance violations

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The Federal Reserve has penalized M&T Bank in Buffalo, N.Y., for violating certain National Flood Insurance Program requirements, according to an enforcement action released Thursday.

The $139.5 billion-asset bank has agreed to pay a $546,000 penalty, which will be passed on to the Federal Emergency Management Agency.

The bank did not immediately reply to a request for comment, and the Fed did not comment further on the enforcement action.

Federal banking regulators are in charge of penalizing banks that offer loans in violation of certain requirements under the National Flood Act, such as failing to obtain flood insurance on the underlying property or not meeting escrow requirements for policies. There are also requirements around specific notices banks must give to borrowers when their property is in a flood hazard area and what options they have for insurance.

Banks are not required to keep up to date with changes in flood maps. But if at any point during the life of the loan it is discovered that flood insurance coverage is deficient, the borrower must be notified and a “force placed” insurance policy must be purchased if the borrower doesn’t obtain one, according to the Fed’s regulations.

The agencies collect fines of up to $2,000 per violation.

Neither M&T nor the Fed provided details on the bank’s specific violations. A spokesman for FEMA, which oversees the National Flood Insurance Program, did not immediately provide comment.

Congress extended the flood insurance program for another year on Oct. 1. Banks have been lobbying for a more permanent authorization of the program and certain reforms that would make it safer to write mortgages in flood-prone areas.

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Flood insurance Mortgages FEMA Penalties and fines M&T Bank Federal Reserve