With less than a month left before the National Flood Insurance Program
(NFIP) expires, the U.S. House of Representatives has passed legislation to reform and reauthorize the program for five years. But because the bill—which is backed by the National Association of REALTORS® (NAR)—still needs Senate approval, it’s unclear whether the long-sought five-year extension will be passed before Dec. 8, when the NFIP is set to expire.
"Realtors® know first-hand what happens when the NFIP expires, and it isn’t good for consumers, businesses or our communities" said NAR President Elizabeth Mendenhall. "We appreciate the leadership that members of Congress have shown passing sound reforms, which will strengthen the program, protect property owners and deliver good results for taxpayers."
The NFIP is responsible for providing the vast majority of flood insurance policies in over 20,000 communities nationwide. Without it, most consumers would be unable to purchase the flood insurance that’s required on mortgages in a flood plain. In the past, NAR has shown that 40,000 home sales are lost every month
when the program is unavailable.
Flood insurance is required for any property that’s in a flood zone and has a federally related mortgage. Any loan backed by Fannie Mae, Freddie Mac, the FHA, the VA, or the Rural Housing Services is a federally related mortgage.
H.R. 2874, the "21st Century Flood Reform Act
," reauthorizes the NFIP for five years, while taking steps to reform the program. These reforms include:
Authorizing $1 billion to elevate, buy out or mitigate high-risk properties
Capping flood insurance premiums at $10,000 per year for homeowners
Removing hurdles to the private flood insurance market, which often offers better coverage at lower cost than the NFIP.
Providing for community flood maps and a homeowner’s ability to appeal their flood designation
Better aligning NFIP rates to match a property’s true risk, particularly for in-land and lower-value properties
Improving the claims process for flood victims
Addressing repeatedly flooded properties, which account for 2 percent of NFIP policies but 25 percent of claim payments
For more information, visit NAR’s NFIP website