Key House and Senate members have reached a bipartisan deal to delay the implementation of major parts of the Biggert-Waters Flood Insurance Reform Act. The agreement — which still must be codified into a bill — will ensure the government continues to subsidize flood-insurance for many homeowners who participate in the National Flood Insurance Program (NFIP) while the impact of higher rates is studied.
The agreement is a result of concerns over the implementation of Biggert-Waters, and the effect it has had on flood insurance premiums since it was passed in July 2012.
The National Flood Insurance Program expires on September 30, and no, Congress has not yet decided how it’s going to extend the program. According to this article in the Wall Street Journal, there’s unlikely to be a long-term agreement before the expiration date.
Private insurers won’t offer flood insurance to areas where flooding is likely, notably parts of Texas and Florida, so the NFIP was created to reduce reliance on federal disaster aid. The idea was that local communities would create (and enforce) laws to map flood plains and reduce the danger to new properties, and the federal government would offer flood insurance.
Unfortunately, rather than reduce the flood danger, the availability of inexpensive insurance (premiums are about $600 per year) encouraged people to move to flood zones. In 2004, the plan paid out $200 million per year just for “repetitive-loss properties.”
Extended! The National Flood Insurance Program
Drip. Drip. Drip.
That might be the sound of Congressional re-authorizations of the National Flood Insurance Program (NFIP), which enables homeowners to purchase flood insurance in approximately 21,000 U.S. communities, including many in Virginia.
Since 2008, the NFIP has experienced ten short-term extensions and five temporary shutdowns. The program lapsed twice in 2010 alone.
The NFIP authority was extended as part of H.R. 2112, a technical bill that combined three annual spending bills with a stopgap funding measure to keep the federal government open for business.
The real estate industry is facing monumental issues in Congress, in the regulatory agencies that govern mortgage financing, in the statehouses that are dealing with critical budget crises and declining property tax revenues, and in municipalities and counties. Each of these issues impact Realtors' ability to do business and serve clients.
Mortgage Interest Deduction (MID)