As of midnight last night, the National Flood Insurance Program expired and I'm mad as hell.
The National Flood Insurance Program expired on Sunday after the Senate failed to pass the latest temporary extension to the cash-strapped program prior to the Easter recess.
Senators are expected to take action on H.R. 4851, the Continuing Extension Act, when they return on April 12th. For the past few years, the NFIP has survived on a series of temporary extensions as legislators have been unable to forge a consensus on the program. The primary point of contention is whether to include coverage for wind damage in the program.
“It’s unfortunate that the NFIP has fallen victim to the political process,” says Blain Rethmeier, spokesman for the American Insurance Association. “Ultimately the people who will suffer the most are property owners who need new coverage or who need to renew their flood insurance policies. One can only hope that Mother Nature is kind until April 12. Otherwise, there’s not much people can do.”
I don’t write about politics, I’m not a political person, BUT…Congress really dropped the ball on this one. And then they all checked out for a 2 week Easter vacation.
Impact on New Orleans West Bank Home Buyers
Many lenders are now requiring flood insurance as a condition for your mortgage loan, whether you are in a flood zone or not. If you are scheduled to purchase a home in the next couple of weeks AND the lender is requiring flood insurance coverage AND you have not already purchased your flood policy then you won’t be closing on your home.
Congress does not go back in session until April 12th, so that is the absolute earliest that we anticipate new policies being issued.
This could have additional fallout in the form of interest rate locks that expire for buyers during this time. Financial experts expect interest rates to rise this spring, so a 2 week delay could also have the unintended consequence of costing a buyer more in the long run with a higher rate on their mortgage.
Impact on New Orleans West Bank Home Owners
No changes are being made to existing policies, so if you were planning to increase your coverage between now and mid-April, put that thought on hold.
The biggest immediate impact, however, is on those home owners with a policy that expires during this period. No policies can be renewed until the program is extended. The risk, of course, lies in the possibility of a flood event.
If that happens, how many people who have paid their premiums each year (and continue to do so through their mortgage escrow accounts) will be left uninsured in the event of a disaster? Will Congress make the program retroactive when it is extended?
I have more questions than answers, but rest assured that I’ll share whatever I learn here in the coming days. In the meantime, if you are scheduled to close on a home purchase in the next 2 weeks, you need to contact your lender immediately to determine if you will be impacted.
For more information about home buying or selling on the West Bank of New Orleans, or relocating to or from NAS JRB New Orleans, please contact the West Bank Living Team. It would be our pleasure to have the opportunity to assist you with any of your real estate needs and have a little fun while doing it!
Originally published at West Bank Living