House Passes Five-Year Flood Insurance Extension
July 15, 2010
The House yesterday approved a bill that would extend the National Flood Insurance Program for an additional five years.
H.R. 5114, sponsored by Rep. Maxine Waters, D-Calif., would bring some stability to the NFIP, which has expired three times this year alone. The bill passed on a 329-90 vote. The Senate would have to approve a similar measure before it becomes official.
Earlier this month, Congress approved legislation that extended the NFIP through Sept. 30. The Mortgage Bankers Association strongly supports the NFIP, noting that more than five million Americans rely on the NFIP as their primary protection against flooding, the most common natural disaster in the United States.
MBA last month called on Congress to pass a longer-term extension of the NFIP, saying disruption of the NFIP has had significant implications for the housing and commercial property industries. In a June 16 letter to Congress, MBA and other trade groups said without flood insurance, no federally related mortgage loans could be made in nearly 20,000 communities nationwide.
"The frequent lapses in the NFIP program are undermining homeowner and commercial property owner confidence in this vital program," the letter said. "Given the fragile state of residential and commercial real estate markets, Congress should take immediate action to restore confidence in the NFIP through a long-term, stand-alone extension."
H.R. 5114 makes several changes to the operations of the NFIP, which has not been updated since 1994. The bill allows for premium and deductible increases to help the Federal Emergency Management Agency, which administers NFIP, to recover financially in the wake of Hurricane Katrina, other hurricanes and repeated flooding in Iowa and other Midwestern states that left it $18.75 billion in debt to the Treasury.
The bill also phases out subsidies currently available to some vacation homes and second homes and nonresidential properties; it would also create a schema that would end subsidies for properties that suffer repetitive losses; several Republicans noted that these repetitive loss properties represent 1 percent of all policies but involve 30 percent of NFIP claims.