The nation experienced a brief loss of flood insurance on March 1st, 2010, when Congress failed to pass an extension on the National Flood Insurance Program (NFIP). For a 24-hour period, homeowners and homebuyers were denied access to the only means of protecting their property from flooding damages. Congress alleviated the 24 hours of panic with an extension of the program. However, that panic has only come to a temporary standstill. Congress will need to extend the NFIP again by the 28th of this month if flood insurance availability is to continue.
first tuesday take: For the moment, the NFIP is doomed to undergo these periodic expirations and extensions, thanks to the continuous and heated debate over its funding.
Last week’s holdup, the work of rogue Senator Jim Bunning (R) of Kentucky, caused brief delays in policy renewals which led to the NFIP expiring for a 24-hour period. The NFIP’s downtime complicated escrow closing for homebuyers in California’s flood-prone areas.
To help recovery from the nation’s housing crisis, California’s real estate industry needs certainty about the future, which means durable rules and programs. A permanent flood insurance program would reduce the great amount of friction already present in a closing while this expiration-extension nonsense only helps to create more friction.
Re: “Flood insurance back in business. For now.” from The Orange County Register