From loan files and flood determinations to National Flood Insurance Program (NFIP) disclosures, flood insurance requirements appear in dozens of client documents related to assurance. These examples correspond to regulatory compliance services and reiterate the significance of flood-related responsibilities (such as lending, servicing, and regulatory obligations tied to federal mortgage activity) within financial institutions.
To that end, recent national observances for World Water Day and National Flood Awareness Week renewed attention to water-related risks. For financial institutions, these commemorations serve as reminders that flood exposure is not only an environmental concern, but it also carries regulatory and operational implications.
In the U.S., flooding remains one of the most common and costly natural disasters and regulators continue to emphasize financial institutions’ responsibilities when lending in heightened flood exposure areas. The following article highlights flood compliance education, reminders, and the importance of ongoing regulatory, operational, and governance considerations for this area.
Why Flood Compliance Merits Continued Attention
The National Flood Insurance Act and the Flood Disaster Protection Act are legislative drivers of flood compliance and establish requirements for lending activity involving properties located in special flood hazard areas.
Examiners are responsible for helping to ensure that financial institutions adhere to the above regulations. They apply this guidance when focusing on accurate flood determinations, clear disclosures, documented processes for flood compliance, and gathering evidence that teams understand flood requirement applications for different points in the lending life cycle.
On the other hand, financial institutions navigate challenges such as evolving flood maps, ongoing insurance tracking, and documentation spread across multiple systems and functions.
Since flood compliance consists of regulation, operations, and third-party coordination, supervisory agencies are placing more emphasis on how financial institutions identify, monitor, and document flood-related risk over time (especially since insufficient flood insurance coverage is one of the leading causes of violations noted, and financial penalties can be assessed for each identified violation).
Legislative Developments Affecting Flood Insurance
Along with supervisory expectations, institutions are monitoring congressional reauthorization of the NFIP. In February 2026, Congress extended NFIP authority through September 30, 2026, providing near‑term program continuity while reinforcing that long‑term authorization remains an active legislative matter.
NFIP participation reinforces flood insurance availability for many federally related mortgage transactions. For lenders and servicers, previous authorization lapses disrupted policy issuance and renewals, delayed property closings, and introduced operational complexities. In addition, the inability to issue or renew policies can create downstream impacts for lending, compliance, and customer experience (despite FEMA indicating that valid claims continue to be paid during lapses).
Still, awareness and preparation are crucial for most institutions that are keeping track of flood compliance updates. Communication, checking authorization status, understanding contingency considerations, and reinforcing regulatory expectations with teams can prime institutions for continuing discussions throughout the year.
Education as a Practical First Step
Preparation and targeted training are critical for helping teams respond to evolving regulatory expectations. ProBank Education Services from Forvis Mazars offers both on‑demand and live webinar programs designed for banking professionals seeking clarity on flood‑related requirements while balancing day‑to‑day responsibilities.
Recent ProBank Education Services programs have addressed topics such as navigating NFIP rules, recognizing common documentation gaps, and understanding examiner expectations through real‑world scenarios. These sessions are designed for lending, operations, compliance, and risk personnel and provide practical context, regulatory grounding examples, and help professionals execute greater consistency across processes.
In addition, the curriculum can help institutions:
- Reduce the likelihood of incomplete or inconsistent flood insurance documentation
- Promote alignment across lending and servicing teams
- Strengthen record-keeping and audit readiness
- Support staff confidence during examinations
Institutional Responsibility & Understanding Water-Related Risks
Legislation and awareness dates stress the importance of water-related risks and their impacts on communities, borrowers, and financial institutions. For lenders, sound risk management and regulatory alignment are important pieces of the compliance puzzle (since flood events can disrupt borrowers and impair collateral, which may influence credit risk and long‑term portfolio performance).
Thus, institutions that invest in ongoing flood education may be better positioned to respond as flood maps shift, and interpretations and supervisory priorities change. Regular training can also establish an organizational culture of regulatory awareness and support more consistent application of flood requirements across teams and functions.
How Forvis Mazars Can Help With Flood Compliance
Forvis Mazars, through ProBank Education Services, supports financial institutions with practical, regulator‑informed flood compliance training. Our on‑demand courses and live programs focus on how flood requirements apply in real lending scenarios, helping teams interpret NFIP rules, address common documentation challenges, and prepare for examiner scrutiny with greater consistency.
Whether institutions are refreshing foundational knowledge or responding to developing regulatory and legislative updates, ProBank Education Services provides focused education that fits operational processes and supports sensible governance. To learn more or discuss training options, connect with our professionals today.