The National Flood Insurance Program (NFIP), established in 1968, allows homeowners and businesses in flood-vulnerable areas to purchase affordable coverage. Although NFIP is used by more than 20,000 communities (or about 5.6 million policyholders nationwide), it was slated to expire on July 31st, which would have rather unceremoniously left thousands of low-land and waterside properties to sink or swim. However, according to a recent article in National Mortgage Professional Magazine, a rescue ship is on the way, as Congress prepares to pass a five-year extension on the insurance program.
This is a major win for the National Association of Home Builders (NAHB), which has been working diligently to clean up and re-authorize the bill to ?ensure that the federally-backed flood insurance program operates smoothly and without delay, remains efficient and effective in protecting property owners, and creates more stability in the housing market,? says NAHB chairman Barry Rutenberg.
But why did the program require reauthorization to begin with? The article explains, ?In the past few years, the NFIP has experienced several short-term lapses in authorization, forcing many home buyers to delay or cancel closings due to the inability to obtain NFIP insurance for a mortgage. In other instances, builders were forced to stop or delay construction on a new home due to the lack of flood insurance approval, resulting in unnecessary delays and job losses.?
Further complicating the situation was what?s known as ?residual risk? language in the flood insurance bill, which would have made insurance mandatory for properties located near levees, dams, and other high-risk bodies of water. The NAHB, in conjunction with a dedicated group of bipartisan senators, were successful in removing this fine print, because, as chairman Rutenberg made clear, ?NAHB believes the local investment in these flood control structures takes into account the risks, and to mandate the purchase of additional flood insurance policies at a cost to the homeowner is simply unfair??
The flood insurance bill comes bundled in a larger legislative package, which also contains a student loan bill and transportation reauthorization. The Senate and House have already approved the legislation, and President Obama is expected to sign it into law shortly. Barry Rutenberg, who has worked so tirelessly to champion the bill, expects the program to remain, ?available, affordable and financially healthy? throughout 2017, which might just be a lifesaver for thousands of homes and businesses.
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