House Passes 5-Year Flood Insurance Extension

The House passed legislation Tuesday to reauthorize the National Flood Insurance Program for five years, which would include reforms. But because the bill—which is backed by the National Association of REALTORS®—still needs Senate approval, it’s unclear whether the long-sought five-year extension will be passed before Dec. 8, when the NFIP is set to expire. Lawmakers could instead pass another short-term extension to give them time to debate NFIP reforms and pass a long-term reauthorization.

NAR President Elizabeth Mendenhall said REALTORS® want to work with lawmakers to avoid a lapse in the program. “REALTORS® know first-hand what happens when the NFIP expires, and it isn’t good for consumers, businesses, or our communities,” she said.

Flood insurance is required for any property that’s in a flood zone and has a federally related mortgage. Any loan backed by Fannie Mae, Freddie Mac, the FHA, the VA, or the Rural Housing Services is a federally related mortgage.

The House bill is called the 21st Century Flood Reform Act, and the measures it provides include:

  1. An authorization of $1 billion in new money to elevate, buy out, or mitigate high-risk properties.
  2. A cap for flood insurance premiums at $10,000 per year for homeowners.
  3. Removal of hurdles to the private flood insurance market, which often offers better coverage at a lower cost than the NFIP.
  4. Provisions for community flood maps and a homeowner’s ability to appeal their flood designation.
  5. Better alignment of NFIP rates to match a property’s true risk, particularly for inland and lower-value properties.
  6. Improvement of the claims process for flood victims.
  7. Provisions for properties that are repeatedly flooded, which account for 2 percent of NFIP policies but 25 percent of claim payments.

“We appreciate the leadership that members of Congress have shown passing sound reforms, which will strengthen the program, protect property owners, and deliver good results for taxpayers,” Mendenhall said.

—Robert Freedman, REALTOR® Magazine

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