The Federal Reserve System this week fined Birmingham, Ala.-based Regions Bank $2.95 million for “unsafe and unsound practices in its flood insurance compliance program and for flood insurance regulatory violations,” according to the Fed.

The Board fined Regions “for its failure to effectively monitor a portfolio of home equity loans for compliance with flood insurance regulations due to changes in loan servicing platforms and third-party service providers,” noting that the bank had a pattern of individual violations of flood insurance regulations.

Violations of the Flood Act require civil penalties of up to $2,000 per violation, according to the order released by the Federal Reserve Board of Governors.

Over a period of more than one year, Regions “did not effectively monitor a significant number of home equity loans and home equity lines of credit subject to the Flood Act for compliance with Regulation H,” the Fed said in its action.

Regulation H permits a state member bank to “make public welfare investments for the purpose of investing in, developing, rehabilitating, managing, selling, or renting residential property, provided that a majority of the units will be occupied by [low and middle income] persons,” according to the Fed.

A bank spokesperson told HousingWire the issue was self-identified by Regions several years ago. 

“We took corrective action and remediated the issue by 2017. There was no customer impact as the matter was confined to our own internal monitoring of flood insurance policies on certain properties,” the spokesperson said. “Today, years after correcting the issue, we are pleased to now fully resolve this legacy matter.”