After multiple hurricanes caused severe damage to properties across the country this year, the National Association of Realtors (NAR) is pushing for Congress to pass “The 21st Century Flood Reform Act,” which would, among other things, reauthorize and reform the National Flood Insurance Program (NFIP).
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The NAR is pushing for the “immediate passage” of the version of the bill that has been amended by the House Financial Services Committee, which reduces the annual premium increase for older properties from 8% to 6.5%. The NFIP must be re-authorized by Congress by Dec. 8, or else it expires. Lawmakers are expected to be on Thanksgiving recess the entire week of the holiday.
Homeowners cannot purchase flood insurance under a normal home insurance policy, and therefore must purchase it from the NFIP or a select few private insurers. People looking to buy a house in a flood-prone area would be unable to get a mortgage unless they were covered with flood insurance.
In a statement issued earlier this year, NAR president Bill Brown said that without an extension of the NFIP, home sales could be severely disrupted.
“The country has been here before, and we know what happens if the National Flood Insurance Program expires,” Brown said. “Home-buying activity grinds to a halt, to the tune of 40,000 lost or interrupted sales every month. Meanwhile, existing homeowners as well as commercial entities may find their largest asset unprotected if the Federal Emergency Management [Agency] can’t renew NFIP policies that expire.”
In addition to reauthorizing the NFIP, the bill would authorize $1 billion to elevate, buy out or mitigate high-risk properties, cap flood insurance premiums at $10,000 per year, double increased cost of compliance coverage and remove hurdles in the private flood insurance market so homeowners have the option of obtaining coverage at a cheaper price point. It would also address the problem of coverage for properties that repeatedly flood, which make up a substantial portion of claim payments.