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September 2018

Stopgap vote continues short-term funding for flood insurance

Congress passed a seventh stopgap extension to the National Flood Insurance Program much to the relief of thousands of current and potential homeowners. The Senate approved the measure by an 86-to-12 vote, sending it to President Trump for his signature just hours before the Aug. 1 deadline.

Realtors applauded the reauthorization and NFIP's ability to borrow funds through Nov. 30, but joined a chorus of lawmakers and regulators in urging for program reforms that would improve access, affordability and stability. Policyholders in 22,000 communities across the country, including several areas in Washington state, depend on the NFIP to protect homes and businesses from storms and hurricanes.

"From Tukwila-Renton on the north, to Puyallup-Sumner on the south, the NFIP takes on special importance because of the Green/Duwamish, White and Puyallup rivers," said Realtor Sam Pace, the South King County Housing Specialist for Seattle King County REALTORS®. "Significant areas in the south end continue to be designated as 'floodplains' on FEMA's flood maps," he noted.

For those areas in particular, the NFIP is especially important for two reasons, Pace explained. "First, lenders tend to require flood insurance for any loan secured by property that is at risk of flooding. Second, the NFIP is the primary source for obtaining the flood insurance that lenders require."

NFIP collects more than $3 billion in premiums each year from more than 5 million households it covers. Claims in 2017 exceeded $8.7 billion, in part due to a string of hurricanes, including Harvey, Irma and Maria. The program has more than $20 billion in public debt on its books, not counting $16 billion that was canceled last year to avoid a $30 billion ceiling on its borrowing, according to The Washington Post.

When the NFIP expired in 2010, the National Association of REALTORS® estimated more than 1,300 home sales were disrupted every day. "That's over 40,000 every month. Without access to the NFIP, buyers simply couldn't get a mortgage or vital protection from the No. 1 cause of loss of property and life: flooding," stated 2017 NAR President William E. Brown.

NAR issued a Call For Action (CFA) in mid-June to urge support for the continuation of flood insurance. An estimated 128,000 members participated.

While reauthorization of NFIP was approved at the deadline, the Senate did not act on a measure that cleared the House (H.R. 2874), titled "The 21st Century Flood Reform Act." Its provisions included increased funds for mitigation activities, caps on overall premium increases, improved mapping processes, and programmatic reforms to help policyholders. Other provisions would have extended NFIP for five years and removed hurdles for more private participation in the flood insurance market.