As of midnight last night, the National Flood Insurance Program expired and I'm mad as hell.
From InsuranceNetworking.com:
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
What is the matter with people especially Congress. Are they unconscious that they don't realize the impact on people!!! The behaviour of Congress on so many issues is like watching a kindergarten play group - only not as well behaved. This is terrible for people.
Yeah, I bet none of them is in a flood zone or without insurance. Unbelievable.
Oh Lisa, this is not good. Have you called your Congressman? Is it Steve Scalise? Let us know and we all could give them a shout out! This is just sad sad sad!!! Please let us know what if anything we can do to help!
Thanks for the comments, everyone. I'm just livid about this - how can they justify going on vacation and leaving people without insurance?? With all of the push for health insurance how about giving that same sense of urgency to protecting the property of the people paying property taxes?
Lisa it amazes me how they keep playing with responsible citizens of the country and rewarding the users. people who buy flood insurance are looking out for the future and their families.
Hi Lisa...Unfortunately the passage of the Health Reform Bill took so long that a number of other matters did not get the attention they desired. We saw the long hours that the Congress worked during the last two weeks they were in session. Other than those that watch c-span, most of us do not really pay attention to the number of congressional hearings and votes happen day after day. We happened to witness it this time because of the importance of that particular bill.
The bill (for flood insurance) was extended from February 28 to March 28 in spite of a holdup of several days. See below.
In the Senate, the $10 billion federal spending bill, which also extends benefits to the unemployed and some federal highway projects, was delayed when Sen. Jim Bunning (R-Ky.) balked, saying he could not support a bill that added to the federal deficit. Late March 2, Bunning relented, allowing the bill to go to a vote, where it passed, 78-19. IFAwebnews
Senate Acts To Extend NFIP; House Action May Be Delayed provides some very good information.
Hopefully the bill will be passed soon after Congress reconvenes and will be in effect at least until the end of December 2010.
Kate
At one point a few years ago, NFIP policies could be purchased the same day as flood damage. That raised the costs substantially... Some people HAD to buy policiers, but other weren't required, but could purchase them as their homes were flooding. Not a good recipe.
Regardless, Congress shouldn't have left it swinging in the wind while they were playing other games.
And if we are going to give Jim Bunning a hard time, perhaps it might be fair to mention that the Senate passed "PayGo" legislation just a few days before. Bunning was asking that the Sentate find a way to pay for the cost of that bill... as required by the law they JUST passed.
Kate, this should absolutely be a priority when they reconvene. There is flooding expected in the Northeast states that may occur before then. What do you think they are going to tell someone who has a flooded house and a lapsed policy because the program was not extended? Sorry isn't going to cut it.
Lane, I did not know that. Our issue in SE Louisiana is that no policies are written while a named storm is in the Gulf of Mexico, no matter what the projected path. This results in delayed closing during hurricane season every year. I'm sure this is a result of the changes you are referencing.
This is NOT good at all... Hopefully your post will gain the attention of the situation.
Hi Lisa...Those unable to get to settlement between the end of the last bill and when the next bill is signed by President Obama are people in flood zones where flood insurance is required. I am not sure how many that will be. Others that are not required to have it but want it can get it once it becomes available.
I agree that it will be a hardship for some. Hopefully it will be taken care of swiftly.
By the way, policies will not lapse according to what I read. People will not lose the coverage they have.
Sorry was pretty much what was said to many people that did not have health insurance even those they had an expensive ailment and their insurance company pulled their coverage. Or, those that lost their job and could not get coverage because of a pre-existing condition.
I was simply stating that Health Care Reform affected more people and took priority.
And, Lane...Too bad there wasn't such a desire to pay as you go when we were racking up tremendous deficits fighting two wars. But then again we did not realize that they were not part of the budget that was made known. The cost was conceal, yes, hidden. Another thing, the biggest game being played was on the part of those trying to obstruct passage of Health Care Reform.
Kate
I had seen the news about the disruption in flood insurance while at the gym the other morning and admittedly 'ho-hummed'. Totally different story for your area! Best of luck to you in getting extensions on the closings.
We have some properties here that require it. I am fortunate that I rarely deal with properties in those zones. The fact they we are depending on politicians, makes it sickening.
Preaty scary stuff. I hope they can get it together before anything happens.
Lisa, I hope Congress acts on it immediately when they return. We are having a lot of rain in our area. Thanks.
Hi Lisa, just stopped back to make sure you got the feature! Thanks AR! We really need to get the word out about this one. (congrats Lisa on your feature BTW too)
The rain is pouring down here in New England and floodings is expected all over the state. Personally I'm not a big fan of any government run programs, for example my flood insurance covers a very narrow band of disasters compared to my standard homeowners policy yet the premium are twice as high. If the jerks in Washington cause health insurance premiums to double a bunch of people will be up chit's creek...
Lisa,
My husband & I recently visited New Orleans and saw the areas that were most affected by past Hurricanes/floods. We couldn't believe how much rebuilding needs to be done. We heard horror stories from property owners who got the runaround from the government & from their insurance companies when trying to get help & reimbursement for damage. I feel congress dropped the ball in may ways for New Orleans. So very sad!
Thanks for the comments, everyone, and thank you, Pamela, for the phone call :)
From the Times-Picayune yesterday afternoon:
Deals to buy homes in flood prone areas can't close unless the lender has proof of flood insurance, and the situation leaves Realtors, insurance agents, title companies and banks scrambling to find ways to keep deals together. But extending sales agreements until Congress reconvenes may not always be possible, Ory said.
Loan agreements only last for a certain amount of time, and lenders may change the interest rates or terms, or require that a prospective borrower be re-qualified. Appraisals could expire. Sellers could decide they'd prefer to sell to someone else. First-time home-buyers might find themselves in a jam if landlords don't extend their leases a little longer. And move-up home-buyers may find that the string of transactions that allows them to sell a home and buy another are interrupted.
The situation comes at a particularly bad time for the beleaguered real estate industry because it's the end of the month, when the biggest proportion of closings are scheduled. And with buyers needing to have homes under contract by April 30 in order to qualify for the federal home-buyer tax credit, the expiration of the flood program could jeopardize the effectiveness of that economic stimulus program in flood-prone states as people rush to buy to make the deadline.
The most telling items in the entire article are not even what I've put here - it's the fact that (1) the planned extension to the program is only until April 30th and (2) there currently is no language in the bill to make coverage retroactive.
I'd be very interested to know if this is impacting anyone's closings over the next couple of weeks or, more importantly, if you are personally affected.
Kate, if I gave the impression that no one would have insurance, I apologize. But if a policy is expiring during this 2 week period, there will be people without coverage.
Lisa, I'm thinking that Congress doesn't have a clue about living in a flood area. And to let something that important hang for two weeks - shame on them!
Hey, you guys have no right to be critical of congress. They have worked hard to screw up this Country. Not only have they worked hard but they have done it with a very limited budget....hell they have had to print more money just to do this. Not only have they had to print additional money but they have had to give themselves substantial raises! This is not easy to do when most Americans are taking huge pay-cuts and or losing their jobs. Can you imagine the courage they must have?
And to think, they just passed the most massive health care bill in the history of this nation! Never mind that housing and jobs are the real issue. Not everybody can accomplish something like this AND go on Vacation. Shame on you to think they should put in extra hours like the rest of us!
Looks like the also neglected to replenish USDA loans too. Hopefully when they come back we will get less obstruction, and more work done that benefits the people.
This is disturbing news. So many areas are FEMA designated flood areas, even if they are not near a body of water. Here in Connecticut, I have seen small streams become raging rivers when we get monsoon rains like we are having today. I went to the Realtors convention in New Orleans in 2006, and saw the devastation of Hurricane Katrina first hand. The people of New Orleans have made great strides since then, and deserve the continued support of the government and the American people.
I would imagine this has to be a huge issue in New Orleans with unexpected consequences felt over the next couple of weeks.
We are fortunate not to have big issues around here.
Hey, Lisa, if you have a closing involving a property that requires flood insurance, you might still be able to close. If the borrower applies for flood insurance under the National Flood Insurance Program (NFIP), one of the following is acceptable evidence pending issuance of the final flood insurance policy:
But, check with the lender to be sure. Hope this helps you make a settlement or two.
Lisa, thanks for the well written blog. Hope you don't mind, but in hopes of raising more awareness, I've written a short one with a link to yours. By the way, this is so familiar! The last time the ramifications must have been so bad that I've mentally blocked the specifics!
Hi Lisa, Well, it made the evening news ! The segment talked about how some buyers could not close without the flood insurance. Well done.
Kate, the deficit portion for Obama's first budget is larger than the whole first budget submitted by Bush... I agree with you that Bush needed to use the veto pen on Congress... but the solution isn't to go completely nuts with wasteful spending.
I'm going to stop hijacking Lisa's post now.
Thanks again for the comments, everyone.
Millie, thanks for your perspective - the impact is definitely not confined to one geographic area and I appreciate your understanding that.
Lewis, excellent information! Thank you.
Thanks for the reblog, Mary Kay.
Lane and Kate, I really didn't mean for this to be a blue v red debate. It just seems to me that this is negligence on the part of all of our representatives, no matter what side of the aisle they sit on.
Freddie Mac: http://www.freddiemac.com/singlefamily/news/2010/0326_flood.html
Office of Thrift Supervision: http://files.ots.treas.gov/25338.pdf
Federal Reserve: http://www.federalreserve.gov/boarddocs/caletters/2010/1003/caltr1003.htm
Thank you, Tyrone!
We were supposed to close on our house tommorow. The buyer can't get a policy because of this so now we're stuck. So frustrating. Fortunately in this situation worst case = moving the closing date, but I'm sure there are plenty of deals pending that will fall apart as a result of this.
The irony is that many of these deals are happening to begin with because of the government real estate stimulus tax credit that was extended through the month of April. Now, many of these buyers potentially won't be able to close
Daniel, I hope that you are able to successfully close after the NFIP is extended. We know it WILL happen, but it shouldn't have to come to this. I encourage you to contact your Congressman and let them know the consequences of their inaction.
That's really crappy! It affects a lot of people here in Hawaii too. I wonder what will be next.
Hi...I am a "Buyer" who unwittingly purchased a home in a FEMA SFHA AE high risk floodplain...my realtor,the sellers,GMAC,State Farm and other conspired to HIDE this from us;even going so far as to draw up a FRAUDULENT flood policy to push the mortgage through.
We were FHA first time homebuyers;
and they couldn't sell us the $300,000 property if it was in an ae high risk floodplain...
We settled on May 8,2008;
and received notification ,MONTHS after settlement...that we needed to buy AE flood insurance or it would be FORCEPLACED at a rate of $3000 per year!Further;we discovered the property was ILLEGALLY renovated by investro/flippers...for $1!Using FEDERAL funds;
and sold to us for $300,000.00
Property had sat abandoned & flooded for years...we were targeted because we were not native "DELAWAREANS"...and the home flooded in August 2009;and seven times since...is currently stenching in 50,000 gallons of toxic flood waters and septic waste;
STATE farm has deemed our home uninhabitable but has REFUSED all 7 floodclaims...
I lost my classical piano studio,which took me years TO BUILD MY CLIENTELE;
OUR BELOVED CAT WAS KILLED FROM THE FLOOD TOXINS...AND WE HAVE BEEN LEFT HOMELESS & DESTITUTE.
SO PLEASE,WHY DON'T YOU LOOK AT THE OTHER SIDE OF THIS MATTER;there is much more to it then meets your eye.
Heidi, I'm so sorry for the situation that you are in. I wish there was more that I could offer you than my sympathy, but I'm not licensed in Delaware (never even been there), so I have no idea what the laws or disclosure requirements are or what your recourse might be.
We have extended a closing for the fourth week. The current owners did not have flood insurance and did not flood in Nashville's recent flooding but the lender is still requiring it. If there was an existing policy, no problem it would have been extended.
My understanding is that the Senate has passed the extension of funding but the House of Representatives has failed to act. Once the bill passes both Houses new policies can be written.
In the mean time upside down sellers are going deeper in the hole waiting on the House of Rep.
Today I wrote my Congressman and carbon copied the editorial section of the Nashville newspaper. Perhaps blogs such as this and our collective prodding will spur some action on their part. Thanks for the blog and re-blog.
I have also learned than most insurance companies are getting out of the flood insurance business and leaving it to the Feds. Kind of like a house having a pre-existing condition.