The devastating floods from Hurricane Harvey that hit Texas have brought the issue of flood insurance to the national forefront. With hurricane season and heavy rains on the horizon for most states, homeowners, consumers and commercial property owners worry they may find themselves either unprotected or unable to get a mortgage. The issue is more pressing now since the National Flood Insurance Program (NFIP) is set to expire at the end of this month.
Realtors are calling on Congress to take swift action on a short-term extension of the program so they can continue work on the 21st Century Flood Reform Act. In July, the national Realtor group announced it had reached an agreement with the U.S. House Financial Services Committee on key legislation to reauthorize and reform the NFIP with important modifications to retain grandfathering and reduce rate increases. Time has passed with no action from Congress. With only a few weeks left before the program expires, real estate professionals say time is running short.
If the NFIP is allowed to expire, it could mean some new and existing homeowners will have significant trouble securing flood insurance for their homes. It may also affect mortgage loans that are federally regulated or insured and homes located in a "special hazard flood area."
"The country has been here before, and we know what happens if the National Flood Insurance Program expires," said Bill Brown, president of the National Association of Realtors. "Homebuying 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."
The NFIP was originally created in 1968 to provide affordable insurance to property owners. The program is now $25 billion in debt to the U.S. Treasury, largely due to claims caused severe flooding and widespread damage in the northeastern coast of the country. The program has been amended, reformed and extended several times. The Biggert-Waters Flood Insurance Reform Act of 2012 extended the NFIP through September 30, 2017.
"Realtors are asking members of Congress to support the reauthorization of the NFIP. The program is the only source of flood insurance for most Americans. If the NFIP lapses, more than 40,000 real estate transactions per month will be in jeopardy," said Denise Welsh, president of the Silicon Valley Association of Realtors.
The 21st Century Flood Reform Act contains numerous provisions of critical importance to consumers and Realtors. The Act reauthorizes the NFIP for a full five years, avoiding the uncertainty of short term extensions and potential shutdowns and provides guidelines for creating better flood maps for the program. It caps NFIP rates at $10,000 per year for property owners and directs FEMA to develop more granular rate tables to ensure fewer properties are over charged by NFIP. The bill also sets aside $1 billion for flood mitigation assistance grants and increases access to private market flood insurance.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.