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House passes flood insurance extension with deadline fast approaching

July 26, 2018 / Source: National Mortgage News

House passes flood insurance extension with deadline fast approaching

WASHINGTON —The House passed a four-month extension to the National Flood Insurance Program Tuesday, just one week before the program is set to expire.

However, the Senate will need to pass the extension as well. In June, the Senate passed a farm bill that included a six-month extension to the program.

Congress has until July 31 to renew the program or risk a lapse in coverage, which would complicate closings for lenders and real estate agents. The National Association of Realtors estimates that should the program lapse, there would be 40,000 fewer home sales per month.

“Flooding is the most common and costly natural disaster in the United States,” Elizabeth Mendenhall, the Realtor group's president, said in a statement. “Without an extension of authority, the National Flood Insurance Program cannot write or renew flood insurance in 22,000 communities nationwide.”

Lawmakers have had to extend the program six times since September, as it has been unable to pass broader legislation to reform the program and extend it for a longer period of time. And House lawmakers continue to debate the best approach for moving forward with flood insurance reform.

House Financial Services Committee Chairman Jeb Hensarling, R-Texas, urged colleagues to support a competing package of legislation, to both reform and lengthen the program. Those reforms would include improving flood mapping and loss mitigation efforts. But the bill never made it to the floor.

“Mr. Speaker, we lost in America 116 lives last year to flooding,” Hensarling said in a speech Tuesday on the House floor. “Billions and billions of dollars of property loss, and yet, we have a program unreformed that incents people to live in harm — incents people to live in harm's way.”

Royce agreed that simply reauthorizing the program did not go far enough. “Unfortunately, I oppose this ‘can-kicking’ exercise and urge my colleagues to do the same,” he said.

Although many industry groups recognize that the program — which is $20 billion in debt — needs reforms, many believe short-term reauthorization is better than a lapse in the program entirely.

“If there is a lapse, many loan closings in high-risk areas will be delayed or otherwise complicated, resulting in additional costs and borrower frustrations,” said Rob Nichols, the head of the American Bankers Association, in a statement.

In a statement, Credit Union National Association CEO Jim Nussle said, “While we encourage Congress to continue to work on a long-term solution to enhance affordability and sustainability of the NFIP and provide certainty to the market, this extension, upon Senate passage and enactment, will ensure credit unions in affected areas are able to continue serving their members’ mortgage needs.”

Hannah Lang

Hannah Lang is Washington-based reporter who writes about federal mortgage policy and the U.S. housing finance system for American Banker and National Mortgage News.