Federal floodplain regulators outlined plans to check banks’ compliance with insurance rules earlier this month when they lifted Lawrence County’s probationary status.

Wednesday, October 13, 1999

Federal floodplain regulators outlined plans to check banks’ compliance with insurance rules earlier this month when they lifted Lawrence County’s probationary status.

Because of the county’s lack of enforcement of homes built in the floodplain, the county had been on probation with the National Flood Insurance Program (NFIP) since 1996, the Federal Emergency Management Agency said.

The county’s public awareness campaigns and increased regulation of floodplain homes merited a change in that status, FEMA Region V director Dale Shipley wrote Oct. 5.

Also, one of FEMA’s responsibilities under the NFIP is to "monitor lender compliance with the mandatory flood insurance purchase requirement," the letter stated.

And Shipley asked the county to determine the lender of record for its most severe floodplain violations so that FEMA can ask federal bank examiners to review the lender’s compliance

"The outcome may be more of your citizens and businesses being better protected from flood damage, and greater lender awareness of the regulations," Shipley wrote.

During visits to the county, FEMA regulators mentioned that even though no wrongdoing is apparent, checking lenders would probably be necessary, county commission president Bruce Trent said.

"They want to make sure they are requiring the proper amount of flood insurance or if they’re rating property correctly," Trent said.

FEMA will most likely look at bank records for the most serious violations under review in the county, he said.

Local bankers say examiners will find exactly what’s in the statutes.

"It’s a federal law and our role is we do a check as part of our process to see if (real estate) is in the floodplain or not," said Jim Barrett, regional president for Firstar.

"If they are, they would be required to carry flood insurance We’ve done that for years," Barrett said.

Mary Kratzenberg, vice president of Lawrence Federal Savings and Loan, agreed, adding that the bank must receive a certificate from FEMA identifying a property’s location in or out of the flood zone before issuing mortgages.

"Before we could do a loan, insurance must be gotten unless part of the property’s in the zone and some is not," Ms. Kratzenberg said. "They must show an elevation certificate of the dwelling in order not take it."

At Firstar, a third party checks flood maps and the required government documentation is made part of the mortgage process, Barrett said.

Ms. Kratzenberg said classes on flood insurance requirements are held every few years for bankers and all customers in a flood area find out the rules.

"We don’t have too many objection," she said. "Our customers are aware of it because it has to be on the disclosures."

Meanwhile, the county will continue regulation of floodproofing and encouraging homeowners to follow the rules, but Trent admits there have been hard feelings from residents because the county had done little of that at first.

Federal officials are seeing behaviors change on both sides – with the public elevating homes, installing vents in lower floors or finding other flood prevention methods, while the county continues notifying violators and issuing permits – all positive steps, he said.

"The instigator of the probation was they (FEMA) felt like we were delinquent in the way we handled development in the (NFIP) requirements and regulations," Trent said. "Now, they’re pleased."

Information about the required county permits for floodplain construction and flood insurance requirements can be obtained by calling the Lawrence County Floodplain Management Program at 533-2159.