Congress Passes Long-Term Flood Insurance Reauthorization
Congress Passes Long-Term Flood Insurance Reauthorization
On Friday, June 29, Congress approved a five-year extension to the National Flood Insurance Program (NFIP). The extension passed as part of a package of bills that signaled bipartisan action ahead of the July 4 holiday.
The move averted a potential disaster in the housing market. Without NFIP, many would-be home buyers in flood zones would be unable to close on a mortgage or refinance their existing home loan. When the program lapsed for two months in 2010, about 1,400 home sales were cancelled each day.
The extension attempts to shore up the finances of the NFIP, which covers 5.6 million people. The program was generally self-sustaining prior to Hurricane Katrina, but it now owes the Treasury nearly $18 billion.
Some changes to the program include more flexibility for the government to raise rates. Also, the extension ends federal coverage for some properties, including vacation homes. The changes also extend to the Federal Emergency Management Agency (FEMA), which runs the flood insurance program. Efforts by FEMA to raise or move homes that are sources of repetitive claims will be streamlined, and the agency will move forward with plans to improve the floodplain mapping.
Source: "Congress Votes to Keep Flood Insurance Program," Claims Journal (July 2, 2012).
Learn more: Congress Extends Flood Insurance for 5 Years, National Association of REALTORS®.
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