Amid Hurricane Harvey and now a looming threat from Hurricane Irma, the National Association of REALTORS® warns Congress that letting the National Flood Insurance Program expire at the end of the month could have dire consequences. NAR says thousands of homeowners, consumers, and commercial property owners could soon find themselves unprotected and unable to get a mortgage.
The NFIP is set to expire on Sept. 30.
The NFIP helps to pay for and provide policies for millions of properties in at-risk flood areas nationwide. The program is currently $24.6 billion in debt.
“The country has been here before, and we know what happens if the National Flood Insurance Program expires,” says NAR President William E. Brown. “Home buying activity grinds to a halt, to the tune of 40,000 lost or interrupted sales every month. Meanwhile, existing homeowners as well as commercial entities may find their largest asset unprotected if the Federal Emergency Management Administration can’t renew NFIP policies that expire.”
In July, NAR announced it had reached an agreement with the U.S. House Financial Services Committee on legislation to reauthorize and reform the NFIP. The agreement included retaining a grandfathering clause so that consumers’ policies wouldn’t lapse and also a reduction in rate increases. But Congress has yet to act on the 21st Century Flood Reform Act.
“With Congress returning from August recess, extending the NFIP to avoid a lapse should be a top priority,” Brown says.
If Congress does let the NFIP lapse, FEMA, for example, will be unable to sell or renew flood insurance policies or pay existing claims.