IMPORTANT: Flood Insurance in Limbo

[JenBayles]

Whether you live in a flood plain or not, you should have flood insurance. Congress has royally messed up this federal program and it has been out of existence since the end of May. While insurance companies administer flood insurance policies, the only place it's available is through the government. It does not exist privately. This article appeared in the Houston Chronicle today. With this active storm season beginning, everyone needs to pay attention to this issue and call their congressperson.

http://www.chron.com/disp/story.mpl/bus ... 81465.html

Flood insurance is floating in limbo
Lapse by Congress stalls sales of homes and worries residents
By NANCY SARNOFF
Copyright 2010 Houston Chronicle
June 26, 2010, 12:38AM

Homeowners across the Houston and Galveston areas who want to buy flood insurance or renew their policies have been stuck in limbo since Congress let the National Flood Insurance Program lapse nearly four weeks ago.
The issue has become particularly troubling because hurricane season has begun, and meteorologists are monitoring a tropical disturbance that could enter the Gulf of Mexico in the early to middle part of next week.
"With a predicted busy storm season upon us, it's essential that Texans living in flood plains have access to this insurance to protect themselves against losses from flood damage," Sen. John Cornyn, R-Texas, said.
What's more, thousands of home closings have being delayed nationwide as some lenders have refused to fund loans on properties requiring flood insurance.

Since the program expired May 31, consumers have been unable to buy or increase their flood insurance coverage.

While the program has fallen through the cracks already twice this year — only to be reinstated within a few days and a couple weeks, respectively - this time around it coincides with hurricane season and the end of the federal tax credit.

"It's really killing us," said Galveston real estate agent Gary Schero, who has six clients waiting to close on homes but can't because the borrowers can't get flood insurance.

One of those is Rosmond Phormahlen, who's trying to buy a three-bedroom house on the island's Fish Village neighborhood.

Her lender won't fund the loan without flood insurance, and now she's worried she might not be able to close in time to qualify for the home buyer tax credit - the main reason she decided to buy the house. The closing deadline is June 30, though there is a proposal in Congress to extend it.
"We finally made it through the whole lending process, only not to be able to close because of flood insurance," Phormahlen said.

The National Flood Insurance Program makes federally backed flood insurance available to homeowners and renters in nearly 20,000 communities across the U.S.

Existing policies
Most flood insurance is acquired through the national program. Federally regulated lenders require borrowers whose properties are in high-risk flood zones to carry the insurance. Private insurance companies make up just a small share of the market.
Consumers with existing policies will not be affected and therefore will not see any interruption in their payments, said Rachel Racusen, a spokeswoman for the Federal Emergency Management Agency. A unit of FEMA manages the program.

Homeowners who want to purchase new policies or need to renew their policies, however, won't be able to do so until Congress renews the program.

Garry Kaufman, president of Galveston Insurance Associates, advises consumers to send their renewal payments and paperwork into their insurance companies, as Congress is expected to renew the program retroactively.
If the program is not retroactive, consumers could be out of luck if they don't have a policy in place or weren't able to renew their coverage before the program lapsed.
FEMA said anyone with questions about their policies should contact their insurance agent.
It has been estimated that for each day the program remains in limbo, approximately 1,400 closings for home purchases must be delayed, according to the National Association of Mutual Insurance Companies in Washington.

Such delays can add significant costs to buyers and sellers, and threaten the housing economy, the group said.

The legislation to extend the program was attached to bills dealing with jobless benefits and business tax breaks that failed to pass.
A separate bill to extend the program retroactively through the end of September was approved by the House earlier this week. The legislation was later introduced in the Senate but it did not pass.
Democrats blamed
A spokeswoman for Sen. Kay Bailey Hutchison, R-Texas said no Republican objected to it.
Cornyn expressed his disappointment that Senate Democrats were blocking the extension.
"I hope we can work together and finally pass flood insurance reform legislation that will ensure reliable access to floor insurance for homeowners and renters across the country," he said.
nancy.sarnoff@chron.com

*stickied by vbhoutex*

[vbhoutex]

This is very important for anyone who has flood insurance!! Those of us that have it are paying for nothing and those that might want/need to get it can't!! So hard not to turn this political, but don't!!

CONTACT YOUR CONGRESSPERSONS NOW and tell the to FIX IT NOW!!!

[allicat1214]

This is REALLY a problem.

The anniversary of my act-of-sale is June 30th, thus my flood insurance expires and renews on that date. I paid my premium and contacted by insurance agent last week. She told me if your policy hasn't expired you are covered. If it expired after June 1 (when congress let it lapse) YOU ARE NOT COVERED EVEN IF YOU PAY YOUR PREMIUM!!!

There was a vote in the Senate on Friday on a bill to renew unemployment benefits that had the flood insurance program tied to that but it was voted down.

Please contact your elected officials and ask for a vote just on the federal flood insurance program!!

[JenBayles]

That's right alli. The policy on my mother's house renewed in June. I've been watching this story since February so I didn't even bother sending in the premium. The one for my house renews at the end of August. The irony is that our local government (county and Flood Control) has been trying to persuade more residents to purchase flood insurance, and now it's unavailable thanks to Congress.

[Stormcenter]

It's available again.

[bvigal]

That's good news. Let's hope it stays available. Next time there is a vote in Washington, same folks who let it lapse may have a good excuse to end it altogether.

From http://www.miamiherald.com/2010/07/13/1728733/lawsuit-fema-flood-insurance-hurting.html
Posted on Tuesday, 07.13.10
The Associated Press
Lawsuit: FEMA flood insurance hurting sea turtles

MIAMI -- The National Wildife Federation claims in a lawsuit that the Federal Emergency Management Agency's flood insurance program is hurting sea turtles by spurring coastal development.

The lawsuit filed Tuesday in Miami federal court claims FEMA is violating the Endangered Species Act by failing to consult with wildlife officials about impact on sea turtles. The lawsuit asks a judge to force FEMA to take these steps.<<<-----???

Development along beaches harms the habitat crucial to threatened or endangered loggerhead, green, hawksbill, leatherback and Kemp's ridley turtles. The lawsuit claims flood insurance encourages this development.

FEMA says it works to ensure all its programs comply with environmental and preservation laws.


**note - Don't ask me what is meant by "these steps". It was written by AP, so it's same confusing wording every place I read on the internet. However, it's not the first lawsuit. One was filed last fall in Arizona, see http://seattletimes.nwsource.com/html/localnews/2009794762_apazfloodinsurancesuit1stldwritethru.html

If insurance wasn't involved, what would the envi groups do to stop development in fragile places? What have they always done? Why are they now pushing this major administrative responsibility and red tape off onto FEMA, who doesn't buy the land, or approve the loans, or the zoning, or the building? And aren't we thrilled about our tax money already allocated to FEMA being spent to battle these lawsuits, instead of helping someone who has suffered a catastrophy, and is in dire need?

[bvigal]

Also released today, a bill to extend NFI for 5 years. It is currently only temporary until end of budget year, Sept 30. http://www.property-casualty.com/News/2010/7/Pages/PIA-Letter-Urges-House-Passage-Of-5Year-NFIP-Extension.aspx
H.R. 5114, called the “Flood Insurance Reform and Priorities Act of 2010

Allowing the flood insurance program to regularly lapse, something that has occurred over the past few years, makes it much more difficult to convince those who need flood insurance to buy it, leaving America’s homes and businesses uninsured...

Permitting uncertainty regarding the long-term future of a program that enjoys broad bipartisan support has had the unintended consequence of delaying real estate closings at a time when our nation is struggling to build a sustainable economic recovery,” they added.

This has occurred at the same time that we are dealing with an environmental disaster in the Gulf of Mexico and facing the prospect of an active hurricane season,” they said.

[bvigal]

NFIP expires AGAIN in 13 days! If this effects you, may want to phone your representatives in Washington...

Is Congress watching the weather as NFIP is about to expire?
By John Lobert
Posted: 1:13 pm, September 16, 2010

Autumn is upon us once again with all the signs of the season that we know and love—the evenings are getting cooler, the kids are back in school, and the National Flood Insurance Program (NFIP) will soon expire. This year may mark a banner year for the NFIP—if Congress fails to extend the program by its expiration date of Sept. 30, the program will expire for the fourth time this year.

It is inexcusable that Congress has made the reform and continuity of the NFIP such a low priority. The same Congress that pushed through health care reform in what they were led to believe was a legitimate effort to assure coverage for all appears to have no qualms about repeatedly leaving tens of thousands of homeowners without flood coverage each time they let the program lapse. True, most of the short term renewals have reinstated the program retroactively to assure continuous coverage, but each time the program expires those homeowners whose policies renew after the expiration date face the frightening possibility of no coverage in the event of a catastrophic loss.

To make matters worse, everytime Congress allows the program to expire—this same Congress that passed numerous measures supposedly to ease the country’s current economic situation—all but shuts down the housing market in flood zones. Where buyers are required to carry flood insurance, home closings must be postponed (or cancelled) until the program is reauthorized. This was particularly ironic when Congress allowed the program to expire for nearly three weeks in April at the same time that many prospective homebuyers were facing an April 30 deadline for the $8,000 stimulus credit for first time homeowners.

Congress needs to extend the NFIP by at least a year—not just for another few months. Of course, extension of the program is really only the beginning. The NFIP, administered by FEMA, but with the vast majority of policies written and administered by private insurers, needs significant reform. Nonetheless, the program should not be permitted to lapse while Congress continues to stall on the reform effort.

Perhaps the reason that badly needed reforms keep ending up on the back burner is that it isn’t popular to enact any changes that may seem to primarily benefit FEMA and the private insurance market (the industry everyone loves to hate). But in reality the proposed reforms include better benefits for policyholders, the ability to put the program back on solid financial ground, and include no gifts for the industry. In its current form the NFIP offers outdated, inadequate coverage limits (no higher than $250,000 for residential and $500,000 for commercial structures); does not include coverage for loss of use; and continues to charge inadequate rates on many older policies. These points and others need to be addressed. Moreover, the program is now $20 billion in debt, and there is no foreseeable way this debt—stemming from Hurricane Katrina—can be repaid. While the Senate has supported forgiving the debt to allow the program to move forward, the House has not. It’s amazing that the same House that has voted on all those bailout and stimulus initiatives in the past 18 months cannot support bailing out a program of the federal government.

Reform of the program has been bogged down by a number of issues, including an effort to add wind coverage to the program. (The NFIP may have many shortcomings, but one thing the program doesn’t need is to expand into other perils.) But after two years of debating reform, it’s time for Congress to recognize that continuing to let the program expire is unacceptable—it’s irresponsible, frightening for homeowners, and write-your-own companies (those companies that administer the vast majority of NFIP policies) are starting to weary of the game.

Why is there so little sense of urgency in Congress about this issue? Have they forgotten about the devastating flooding in Atlanta last year? The Red River flooding scare of this past spring? How about 2010’s Hurricanes (as of the date of this writing) Alex, Danielle, Earl, Igor, and Julia?

Don’t they have the Weather Channel in Washington?




http://ifawebnews.com/2010/09/16/is-congress-watching-the-weather-as-nfip-is-about-to-expire/

[vbhoutex]

Wonderful!! My policy expires in one month.

[somethingfunny]

Makes you wish a water main would break right underneath the Capitol chamber doesn't it?

[vbhoutex]

Makes you wish a water main would break right underneath the Capitol chamber doesn't it?

Don't even get me started on that!! I will have to ban myself if I go any further with my comments.

[mitchell]

Here is an update from FEMA:

NFIP Extended through September 30, 2011

Yesterday afternoon the House of Representatives passed a one year extension of the National Flood Insurance Program, extending the current program through September 30, 2011. The Senate passed the bill, S. 3814, on September 21 and the House passed it by voice vote on September 23. The measure now goes to the White House for the President's signature, which is expected to happen quickly. This is a clean extension, with no other provisions in the bill. (Full details can be found by searching for bill number S. 3814 on http://thomas.loc.gov)