December 17, 2011--Congress has extended another limited time frame for
the National Flood Insurance Program (NFIP) authority through May 31, 2012. This latest extension was a part of H.R. 2055 combining
the remaining nine appropriations bills to fund the federal government for
Fiscal Year 2012. Unfortunately, this is another patch to an already leaky life
raft.
Congress refuses to implement a longer term for this program opting instead for a 6-month extension that may jeopardize existing homeowners and purchasers at its expiration.
What is the National Flood Insurance Program?
Congress refuses to implement a longer term for this program opting instead for a 6-month extension that may jeopardize existing homeowners and purchasers at its expiration.
What is the National Flood Insurance Program?
The National Flood
Insurance Program (NFIP) was established in 1968 by Congress to ensure that
homeowners and renters in participating flood-prone communities have access to
affordable flood insurance.
The Federal Emergency
Management Agency (FEMA) administers program.
They also prepare flood insurance
rate maps pinpointing
high-risk areas—known as 100-year flood plains. In these 21,000+ areas, lenders
may require that homebuyers purchase flood insurance before obtaining a
mortgage. The program includes more than ten
million homes in these high-risk areas.
The Chesapeake Bay area includes homes in and around
Greater Annapolis, the Eastern shore, District of Columbia, and Virginia in
this jurisdictional coverage area.
What impact
does it have on the housing market?
The coverage is essential to more than 500,000+ homes
sales a year. Since lenders will most
likely require flood insurance on homes in the Chesapeake Bay region of
Maryland-DC-Virginia, purchasers who have not obtained the coverage prior to
settlement on their home sale will not be able obtain coverage when the NFIP
extension expires.
When Congress allowed the National Flood Insurance
Program to lapse twice in 2010 for several weeks at a time, it is estimated
that close to 50,000 home sale transactions were affected. This colossal mistake put the brakes on home
purchase transfers for thousands of buyers across the nation, costing both
purchasers and sellers money or the home sale while waiting to obtain the
lender-required flood insurance.
Imagine how many homes for sale around the Chesapeake
Bay region that could not sell because flood insurance was not available.
What impact does it have on existing homeowners in
flood zones?
Most homeowners insurance does not include flood
insurance. Those homeowners who are up for renewal when NFIP expires will lose
their coverage. This could effectively
provoke the lender to call the mortgage due.
Or in the event of a flood, the homeowner would incur damage that could
not be remedied without the insurance coverage.
What can you do to have a voice in this matter?
Our region is directly affected by the flood insurance
program lapses. National Association of Realtors® is requesting a five year
extension to ensure housing market stability and predictability. Locate your
representative and call or write to request that Congress extend the NFIP
for more than the limited extensions granted these past few years.
Email me to request a free brochure on how you can
protect your home.
