Information provided from NAR…

Without Congressional action, the National Flood Insurance Program (NFIP) will lapse at midnight on Friday, November 30, 2018.  NAR is making every effort to secure a long-term reauthorization before then.  Here are the answers to some frequently asked questions.

What are the prospects for an extension?

All early indications point to an on-time extension of the NFIP. Congressional leaders are engaged. Legislation to extend the program has been introduced, and there are multiple pathways to passage before November 30th. All previous extensions were on time or within a few days of the deadline minimizing the market impacts.

Why is it taking so long?

This is not a simple up-and-down vote on an extension bill by itself. Rather, the extension is expected to be attached to a broader legislative vehicle, possibly the Omnibus bill to fund the government. Because there are multiple moving parts, discussions have been on-going, and no decisions are likely to be made until closer to the deadline.

What is NAR doing?

  • NAR is in regular communication with Congressional leaders.
  • NAR is coordinating with a broad coalition of industry groups. Read our most recent coalition letter.
  • Hundreds of members of Congress have been contacted about the importance of NFIP since August.
  • NAR has raised the profile of the issue with multiple calls for action, talking points, op-eds and paid ads.
    • Click here for the latest example of the heightened coverage the press is giving this issue.
    • Attached is an advanced copy of President Smaby’s Op-Ed soon to be published in The Hill newspaper, which is read by many members of Congress and their staff.

What happens next?
NAR will continue to closely monitor the situation and is prepared to escalate our grassroots efforts if it becomes necessary.  We should know more on Monday, November 26th.

What happens during a lapse?

The NFIP cannot sell or renew flood insurance policies. The NFIP can pay claims as long as funds are available, but may not borrow more from the U.S. Treasury. The federal requirement to purchase flood insurance is also suspended during a lapse, which means it is entirely up to lenders to decide whether to make loans in special flood hazard areas while flood insurance is not available from the NFIP.

What about my client’s flood insurance?

  • Existing NFIP policies will remain in effect until their expiration date (which is the renewal date plus a 30-day grace period), and claims will continue to be paid as long as FEMA has the funds on hand.
  • Existing policies may also be “assigned” to/assumed by property buyers during a lapse (see p. 3 here).
  • Renewal policies are generally issued as long as the application is received prior to a lapse and the premium is received within the 30-day grace period. Other renewals must wait for reauthorization.
  • Private flood insurance backed by a source other than NFIP (e.g., Lloyd’s of London) are not affected by a lapse. Click here and here for some options.
  • During a lapse, some lenders may opt to make special-flood-hazard-area loans without NFIP insurance, but they must be willing to bear the full risk of their decision and few do in NAR’s experience.

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