The National Association of Realtors is calling on Congress to act now to reform and extend the National Flood Insurance Program, which is set to expire on July 31. Allowing the deadline to lapse would deny necessary insurance coverage to homeowners and buyers in more than 20,000 communities nationwide.
"Last year, Harvey, Irma and Maria, three Category 4 hurricanes, brought devastating floods causing $200 billion in damage. Forecasters are predicting that this year will bring more severe weather, said Bill Moody, president of the Silicon Valley Association of Realtors. "With the start of hurricane season and heavy rains for most states, property owners worry they may find themselves either unprotected or unable to get a mortgage."
The NFIP provides up to $350,000 of flood insurance coverage for federally-backed mortgage in 22,000 communities nationwide. It also provides an alternative to taxpayer-funded disaster assistance. While there is a growing market for private flood insurance, for many, the NFIP continues to be the primary source of asset protection against flooding, the most common and costly natural disaster in the U.S.
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 by severe flooding and widespread damage in the northeastern coast of the country. The program has been amended, reformed and extended several times.
In November last year, the House of Representatives passed the NAR-supported 21st Century Flood Reform Act, which contains numerous important provisions for consumers. 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 limits maximum flood insurance premiums to $10,000 per year for residential properties, and directs FEMA to develop more granular rate tables to ensure fewer properties are overcharged by the NFIP. The bill sets aside $1 billion for flood mitigation assistance grants and increases access to private market flood insurance, which often offers better coverage at lower cost. The bill also addresses issues with repeatedly flooding properties that account for 2 percent of NFIP policies and 25 percent of claim payments over the history of the program.
The House passed the bill and it is now in the Senate, the Banking Committee has not marked up its version of the NFIP reauthorization and reform legislation. NAR is urging the Senate to act quickly. The last time the NFIP expired, approximately 1,400 home closings were interrupted each day until the program was reinstated. In all, the program has lapsed on a number of separate occasions for two months combined with a total of 23 separate short-term extensions.
"The NFIP is the only source of flood insurance for most Americans. If the NFIP lapses, it could mean some new and existing homeowners will have significant trouble securing flood insurance for their homes and thousands of real estate transactions per month will be in jeopardy," said Moody.
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.