National Flood Insurance Program Expires | What's the Impact on New Orleans Real Estate?

Real Estate Broker/Owner with Crescent City Living LLC Licensed LA RE Commission

As of midnight last night, the National Flood Insurance Program expired and I'm mad as hell.


The National Flood Insurance Program expired on Sunday after the Senate failed to pass the latest temporary extension to the cash-strapped program prior to the Easter recess.
Senators are expected to take action on H.R. 4851, the Continuing Extension Act, when they return on April 12th. For the past few years, the NFIP has survived on a series of temporary extensions as legislators have been unable to forge a consensus on the program. The primary point of contention is whether to include coverage for wind damage in the program.
“It’s unfortunate that the NFIP has fallen victim to the political process,” says Blain Rethmeier, spokesman for the American Insurance Association. “Ultimately the people who will suffer the most are property owners who need new coverage or who need to renew their flood insurance policies. One can only hope that Mother Nature is kind until April 12. Otherwise, there’s not much people can do.”

I don’t write about politics, I’m not a political person, BUT…Congress really dropped the ball on this one. And then they all checked out for a 2 week Easter vacation.

Impact on New Orleans West Bank Home Buyers

Many lenders are now requiring flood insurance as a condition for your mortgage loan, whether you are in a flood zone or not. If you are scheduled to purchase a home in the next couple of weeks AND the lender is requiring flood insurance coverage AND you have not already purchased your flood policy then you won’t be closing on your home.

Congress does not go back in session until April 12th, so that is the absolute earliest that we anticipate new policies being issued.

This could have additional fallout in the form of interest rate locks that expire for buyers during this time. Financial experts expect interest rates to rise this spring, so a 2 week delay could also have the unintended consequence of costing a buyer more in the long run with a higher rate on their mortgage.

Impact on New Orleans West Bank Home Owners

No changes are being made to existing policies, so if you were planning to increase your coverage between now and mid-April, put that thought on hold.

The biggest immediate impact, however, is on those home owners with a policy that expires during this period. No policies can be renewed until the program is extended. The risk, of course, lies in the possibility of a flood event.

If that happens, how many people who have paid their premiums each year (and continue to do so through their mortgage escrow accounts) will be left uninsured in the event of a disaster? Will Congress make the program retroactive when it is extended?

I have more questions than answers, but rest assured that I’ll share whatever I learn here in the coming days.  In the meantime, if you are scheduled to close on a home purchase in the next 2 weeks, you need to contact your lender immediately to determine if you will be impacted.


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Terri and Lisa | The West Bank Living Team For more information about home buying or selling on the West Bank of New Orleans, or relocating to or from NAS JRB New Orleans, please contact the West Bank Living Team. It would be our pleasure to have the opportunity to assist you with any of your real estate needs and have a little fun while doing it!

Originally published at West Bank Living

Comments (39)

Susan Brown
Keller Williams NE, Kingwood Texas (Humble & Atascocita too) - Kingwood, TX

Lisa, I'm thinking that Congress doesn't have a clue about living in a flood area.  And to let something that important hang for two weeks - shame on them!

Mar 30, 2010 02:32 AM
Damon Gettier
Damon Gettier & Associates, REALTORS- Roanoke Va Short Sale Expert - Roanoke, VA
Broker/Owner ABRM, GRI, CDPE

Hey, you guys have no right to be critical of congress.  They have worked hard to screw up this Country.  Not only have they worked hard but they have done it with a very limited budget....hell they have had to print more money just to do this.  Not only have they had to print additional money but they have had to give themselves substantial raises!  This is not easy to do when most Americans are taking huge pay-cuts and or losing their jobs.  Can you imagine the courage they must have?

And to think, they just passed the most massive health care bill in the history of this nation!  Never mind that housing and jobs are the real issue.  Not everybody can accomplish something like this AND go on Vacation.  Shame on you to think they should put in extra hours like the rest of us!

Mar 30, 2010 02:39 AM
Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

Looks like the also neglected to replenish USDA loans too. Hopefully when they come back we will get less obstruction, and more work done that benefits the people.

Mar 30, 2010 02:51 AM
Millie C. Legenhausen
Calcagni Real Estate, Hamden, Connecticut - Hamden, CT
CRS, GRI, CIPS, MBA, Realtor

This is disturbing news. So many areas are FEMA designated flood areas, even if they are not near a body of water. Here in Connecticut, I have seen small streams become raging rivers when we get monsoon rains like we are having today. I went to the Realtors convention in New Orleans in 2006, and saw the devastation of Hurricane Katrina first hand. The people of New Orleans have made great strides since then, and deserve the continued support of the government and the American people.

Mar 30, 2010 04:07 AM
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

I would imagine this has to be a huge issue in New Orleans with unexpected consequences felt over the next couple of weeks.

We are fortunate not to have big issues around here.

Mar 30, 2010 08:45 AM
Lew Corcoran, ASP®
Scena Home Staging & Decora Photography - East Bridgewater, MA
Home Stager & Real Estate Photographer

Hey, Lisa, if you have a closing involving a property that requires flood insurance, you might still be able to close. If the borrower applies for flood insurance under the National Flood Insurance Program (NFIP), one of the following is acceptable evidence pending issuance of the final flood insurance policy:

  • A completed and executed NFIP Flood Insurance Application plus a copy of the borrower's premium check or agent's paid receipt;
  • A completed and executed NFIP Flood Insurance Application plus the final HUD-1 form reflecting the flood insurance premium collected at closing.
  • A completed and executed NFIP General Change Endorsement Form showing the assignment of the current flood insurance policy by the property seller to the borrower; or
  • An agent-executed NFIP Certification of Proof of Purchase of Flood Insurance.

But, check with the lender to be sure. Hope this helps you make a settlement or two.

Mar 30, 2010 09:24 AM
Mary Kay Hopkins
Mary Kay Hopkins, LLC e-PRO, GRI, CRS, CRB - Lake Charles, LA

Lisa, thanks for the well written blog. Hope you don't mind, but in hopes of raising more awareness, I've written a short one with a link to yours. By the way, this is so familiar! The last time the ramifications must have been so bad that I've mentally blocked the specifics!

Mar 30, 2010 10:38 AM
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos

Hi Lisa,  Well, it made the evening news !  The segment talked about how some buyers could not close without the flood insurance.  Well done.

Mar 30, 2010 11:18 AM
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

Kate, the deficit portion for Obama's first budget is larger than the whole first budget submitted by Bush...  I agree with you that Bush needed to use the veto pen on Congress... but the solution isn't to go completely nuts with wasteful spending. 

I'm going to stop hijacking Lisa's post now.

Mar 30, 2010 01:27 PM
Lisa Heindel
Crescent City Living LLC - New Orleans, LA
New Orleans Real Estate Broker

Thanks again for the comments, everyone. 

Millie, thanks for your perspective - the impact is definitely not confined to one geographic area and I appreciate your understanding that.

Lewis, excellent information!  Thank you.

Thanks for the reblog, Mary Kay.

Lane and Kate, I really didn't mean for this to be a blue v red debate.  It just seems to me that this is negligence on the part of all of our representatives, no matter what side of the aisle they sit on.

Mar 30, 2010 02:45 PM
Tyrone Baker, Mortgage, Home Loans
Rancho Mirage, CA

Tyrone Baker Regarding mortgages that need to close with flood ins prior to congress extending...

Freddie Mac:

Office of Thrift Supervision:

Federal Reserve:


Mar 30, 2010 04:07 PM
Lisa Heindel
Crescent City Living LLC - New Orleans, LA
New Orleans Real Estate Broker

Thank you, Tyrone!

Mar 31, 2010 06:30 AM
Daniel Tardy

We were supposed to close on our house tommorow.  The buyer can't get a policy because of this so now we're stuck.  So frustrating.  Fortunately in this situation worst case = moving the closing date, but I'm sure there are plenty of deals pending that will fall apart as a result of this.

The irony is that many of these deals are happening to begin with because of the government real estate stimulus tax credit that was extended through the month of April.  Now, many of these buyers potentially won't be able to close

Mar 31, 2010 02:30 PM
Lisa Heindel
Crescent City Living LLC - New Orleans, LA
New Orleans Real Estate Broker

Daniel, I hope that you are able to successfully close after the NFIP is extended.  We know it WILL happen, but it shouldn't have to come to this.  I encourage you to contact your Congressman and let them know the consequences of their inaction.

Mar 31, 2010 02:49 PM
Georgie Hunter R(S) 58089
Hawai'i Life Real Estate Brokers - Haiku, HI
Maui Real Estate sales and lifestyle info

That's really crappy!  It affects a lot of people here in Hawaii too.  I wonder what will be next.

Apr 09, 2010 03:45 PM

Hi...I am a "Buyer" who unwittingly purchased a home in a FEMA SFHA AE high risk realtor,the sellers,GMAC,State Farm and other conspired to HIDE this from us;even going so far as to draw up a FRAUDULENT flood policy to push the mortgage through.

We were FHA first time homebuyers;

and they couldn't sell us the $300,000 property if it was in an ae high risk floodplain...

We settled on May 8,2008;

and received notification ,MONTHS after settlement...that we needed to buy AE flood insurance or it would be FORCEPLACED at a rate of $3000 per year!Further;we discovered the property was ILLEGALLY renovated by investro/flippers...for $1!Using FEDERAL funds;

and sold to us for $300,000.00

Property had sat abandoned & flooded for years...we were targeted because we were not native "DELAWAREANS"...and the home flooded in August 2009;and seven times currently stenching in 50,000 gallons of toxic flood waters and septic waste;

STATE farm has deemed our home uninhabitable but has REFUSED all 7 floodclaims...

I lost my classical piano studio,which took me years TO BUILD MY CLIENTELE;


SO PLEASE,WHY DON'T YOU LOOK AT THE OTHER SIDE OF THIS MATTER;there is much more to it then meets your eye.


Apr 10, 2010 06:19 PM
Lisa Heindel
Crescent City Living LLC - New Orleans, LA
New Orleans Real Estate Broker

Heidi, I'm so sorry for the situation that you are in.  I wish there was more that I could offer you than my sympathy, but I'm not licensed in Delaware (never even been there), so I have no idea what the laws or disclosure requirements are or what your recourse might be.

Apr 14, 2010 07:12 AM
Franklin & Brentwood, TN Homes Mike Nastri
Keller Williams Realty - Franklin, TN
It matters to us as much as it matters to you.

We have extended a closing for the fourth week.  The current owners did not have flood insurance and did not flood in Nashville's recent flooding but the lender is still requiring it.  If there was an existing policy, no problem it would have been extended.  

My understanding is that the Senate has passed the extension of funding but the House of Representatives has failed to act.  Once the bill passes both Houses new policies can be written.  

In the mean time upside down sellers are going deeper in the hole waiting on the House of Rep.

Today I wrote my Congressman and carbon copied the editorial section of the Nashville newspaper.  Perhaps blogs such as this and our collective prodding will spur some action on their part.  Thanks for the blog and re-blog.  

I have also learned than most insurance companies are getting out of the flood insurance business and leaving it to the Feds.  Kind of like a house having a pre-existing condition.


Jun 18, 2010 05:59 PM
Dave Sullivan
Real Estate One - Birmingham, MI
Michigan Realtor with an investor viewpoint

Excellent information I will forward it if that is ok? thank you!!!

Dec 01, 2012 01:15 AM
Lisa Heindel
Crescent City Living LLC - New Orleans, LA
New Orleans Real Estate Broker

Dave, this information is from 2010. The program has been extended.

Dec 01, 2012 01:30 AM