Insurance Group Urges Quick Action To Extend NFIP

Posted by Orb Staff on June 21, 2010 No Comments
Categories : Residential Mortgage

ntinuing failure of Congress to extend the National Flood Insurance Program (NFIP) is placing homeowners at risk during the hurricane season and with the BP oil leak continuing, according to the National Association of Professional Insurance Agents (PIA). The nation's flood insurance program has been in lapsed status since June 1, after Congress failed to extend it past its May 31 expiration date. Last Thursday, the Senate voted down a package that included an NFIP extension. The House has already approved an extension. ‘Congress has failed to extend the flood insurance program, with the hurricane season underway and the BP oil leak continuing in the Gulf of Mexico,’ says PIA National President-elect Brian Marino, co-chair of the association's working group on natural catastrophes. ‘The lack of action to renew the flood insurance program means homeowners still cannot obtain new flood insurance coverage through the NFIP.’ The flood insurance program lapsed at midnight on June 1, just as the 2010 Atlantic hurricane season started. It's the fourth time this year that Congress has allowed the NFIP to slip into lapsed status. While no new policies can be issued during a lapse in NFIP authorization, consumers with current flood insurance policies remain covered. Claims payments are not affected. ‘What's affected are pending real estate transactions,’ Marino explains. ‘Many mortgage lenders require proof of flood insurance, and with the NFIP lapsed and unable to write new policies, closings may be delayed. With the country struggling to recover from a recession, allowing real estate transactions to grind to a halt is counterproductive.’ In a June 18 Lender Letter, Fannie Mae said it will purchase mortgage loans secured by properties located in Special Flood Hazard Areas that do not have an active flood insurance policy, as long as certain conditions are met. Until evidence of active flood insurance is obtained, a lender may deliver a loan to Fannie Mae on the condition that the borrower can provide acceptable evidence of a completed application for flood insurance and a copy of a check or the final HUD-1 Settlement Statement reflecting payment of the initial premium, or the assignment of an existing flood insurance policy from the property seller to the purchaser. SOURCES: [link=http://www.pianet.org/NewsCenter/PressReleases/06-18-10.htm]PIA[/link], [link=https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2010/ll1008.pdf]Fannie Mae

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