Flood Insurance is set to expire May 31, 2010

By
Real Estate Broker/Owner with The Real Buyer's Agent

Congress is still trying to avoid a lapse in the National Flood Insurance Program.  The program will expire on May 31, 2010 unless Congress reaches an agreement on an extension before adjourning for the Memorial Day recess.  The best information we have received from our Congressional allies is that

it is likely an agreement WILL NOT BE REACHED before the expiration.

 Flood

During the Memorial Day congressional recess, NAR Federal Political Coordinators will be setting up meetings with Members of Congress to urge immediate action on a lasting NFIP extension.  Additional information regarding NAR's policy position is available at www.realtor.org

 

After May 31, the NFIP will not have the statutory authority to issue new or renewal policies until Congress reauthorizes the program.  This will not affect existing policies, renewal policies within a 30-day grace period, or policies purchased prior to the program's lapse.  Also, FEMA allows buyers

to "assume" the seller's existing policy without having to re-issue it (http://www.fema.gov/pdf/nfip/manual201005/03gr.pdf)  The purchase requirement for flood insurance may be met with non-NFIP policies; for instance, Lloyd's of London, Chubb and AIG have offered such insurance, but it can be very

expensive and is limited to a certain number of  states, with other conditions.

 

NAR has been working with FEMA, FHA, Fannie, Freddie and the VA to provide guidance, similar to what it provided in April, for lenders as to the steps they may take to meet flood insurance purchase requirement during an NFIP lapse.  With updated guidance in hand, lenders should have the assurances

that they need to continue to close loans.  FHA has already issued updated guidance.  Fannie Mae, Freddie Mac, the VA, and other lending authorities are expected to release guidance shortly, and NAR will post the guidance at www.realtor.org

 

We encourage you to direct your members to the following resources for additional information.

FEMA:       http://www.fema.gov/business/nfip

FHA:        http://www.hud.gov/offices/hsg/sfh/ref/sfh1-18c.cfm

Fannie Mae: https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2010/ll1005.pdf

Freddie Mac:      http://www.freddiemac.com/singlefamily/news/2010/3/NFIP_authority.html

VA:         http://www.homeloans.va.gov/

 

Posted by

I’m the owner of Charleston's first exclusive buyer's agency. Everyone at our company only represents buyers which means we are able to act as our clients advocate throughout the buying process. The Real Buyer’s Agent is a full service company focused on one basic objective: ensuring that clients find and buy the home of their choice at the best possible price and terms. Learn more about Buyer's agency and the Charleston area at our website!

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Rainer
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Tom Robinson
Keller Williams Realty Kingstowne/Alexandria, VA Office - Fairfax, VA
Experienced Real Estate, Professional Serving No. VA and DC

You learn something new everyday. Thanks for the tips.

May 28, 2010 07:11 AM #1
Rainer
278,267
Kathryn Maguire
GreatNorfolkHomes.com (757) 560-0881 - Chesapeake, VA
Serving Chesapeake, Norfolk, VA Beach

I actually blogged about this last week and encouraged anyone with a closing coming up after the expiration to have the buyers pre-pay for the insurance.  That way, they won't be stuck if it does not get renewed.  This happened to an agent in our office the last time the program lapsed...he had a delayed closing which could have been avoided had the insurance been paid for before the closing.  It is risky, though, if the closing never happens.

May 28, 2010 07:12 AM #2
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Rainer
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David Kent

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