NAFCU urges NCUA's help on delay of NFIP premium hikes

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PJ Hoffman

Dec. 10, 2013 – NAFCU Regulatory Affairs Counsel PJ Hoffman urged NCUA on Monday to work with Congress to delay premium increases under the National Flood Insurance Program – which threaten those who live in flood-prone regions – in light of a multi-agency proposed rule regarding loans secured by property in flood hazard zones.

Hoffman renewed NAFCU’s call to alter the scheduled increases under the NFIP until more study can be done: “NAFCU believes such increases should be delayed until at least such time as the Federal Emergency Management Agency (FEMA) completes its affordability impact study outlined in the Biggert-Waters Flood Insurance Reform of 2012,” he said. “While this will require an Act of Congress, NAFCU encourages NCUA and other agencies to work with Congress to find a solution to this impending problem.”

Hoffman highlighted the proposed rule’s requirement that credit unions with more than $1 billion in assets, or servicers acting on their behalf, to escrow premiums and fees for flood insurance for any loans secured by residential improved real estate or a mobile home. “NAFCU has heard from a number of credit unions in rural and underserved areas that are concerned that this added cost could drive them out of the mortgage business for homes in flood hazard areas, ultimately limiting consumer options,” Hoffman wrote.

Some NFIP premiums are scheduled to rise this year. The Federal Emergency Management Agency says the increases will primarily affect subsidized policy holders, mostly for properties located in special flood hazard areas. FEMA said a 25 percent annual premium increase will immediately affect 5 percent of subsidized policies.

In July, House Financial Services Committee Ranking Member Maxine Waters, D-Calif., and other House members from both sides of the aisle urged FEMA to prevent these increases. The “Homeowner Flood Insurance Affordability Act” was introduced with bipartisan support last month in the House and Senate to delay premium increases.

NAFCU has meanwhile joined with 15 other groups in seeking a summit on the 2012 NFIP reform provisions.

Related Links:
NAFCU letter
"NAFCU ramps up call for delayed NFIP hikes," 11/19/13