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.
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.