Updated March 2014
After several active hurricane seasons and devastating floods over the past few years, flood insurance had garnered much attention from lawmakers in Congress. While there had been a lack of consensus on how to reform the National Flood Insurance Program (NFIP), leading to a series of short-term extensions, Congress acted in June 2012 to reauthorize the program for an additional 5 years. NAFCU supported this effort, as a long-term reauthorization will provide certainty and consistency for lenders and the millions of Americans who rely on this important program as a cornerstone of homeownership.
In June of 2012, an agreement was reached in the Senate and between the two chambers to reauthorize the NFIP for an additional 5 years. The language authorizing the extension through fiscal year 2017 was included in an unrelated conference report for the highway reauthorization bill (H.R. 4348). Both the House and Senate approved the package deal with votes of 373-52 and 74-19, respectively, and the President promptly signed it into law.
In addition to reauthorizing the NFIP for 5 years, the final deal included a provision from Senateor Tom Coburn to phase out federal subsidies for flood insurance on second homes. It also included a NAFCU sought provision, which clarifies the law that allows lenders to collect premiums for force-placed flood insurance during a 45-day notification period if borrowers let policies lapse. NAFCU believes that it was an issue of fairness given that credit unions participating in the NFIP continued to assume the risk of property damage during this delinquency notification window.
It has been well over a year since the bill reauthorizing the NFIP for 5 years was enacted. Outlined in the bill are a series of premium increases designed to make the program more actuarially sound over time. The bill also requires the Federal Emergency Management Agency (FEMA) to complete an affordability impact study and share its findings with Congress. To ensure new premiums are not unaffordable and that they don’t have a drastic negative impact on the housing recovery, NAFCU has joined other industry groups in supporting a delay of premium increases until the FEMA study can be reviewed.
In January 2014 the Senate passed legislation (S. 1926) that would delay the implementation of these premium increases until such time as further study can be done to address homeowner affordability. In March 2014 House passed similar legislation (H.R. 3370), offering a set of corrective provisions that would shield homeowners from drastic premium increases. The House bill will now go back to the Senate for additional consideration. With a large contingent of lawmakers on both sides of the aisle pressing for action on this issue, it is expected that differences will be resolved between the two chambers and a bill will be sent to the President’s desk this Congress.
Flood Insurance Policy Letters
03-04-2014 NAFCU support for the amended Homeowner Flood Insurance Affordability Act of 2014 (H.R. 3370)
11-18-2013 NAFCU letter on Biggert-Waters Flood Insurance Act of 2012
11-15-2013 NAFCU joint letter on FEMA
09-18-2013 Merkley-Heller NFIP letter
5-15-12 Boehner-Pelosi NFIP Extension
5-8-12 Tester-Vitter NFIP Reauthorization Support Letter
9-7-11 Johnson-Shelby Flood Insurance Reform Markup Letter
7-7-11 Boehner-Pelosi H.R. 1309 Support Letter
6-8-11 Johnson-Shelby National Flood Insurance Program Comment Letter
5-11-11 Bachus-Frank Flood Insurance and CFPB Mark-Up Comment Letter
4-5-11 Biggert-Gutierrez Flood Insurance Comment Letter
9-13-10 Pelosi-Boehner Flood Insurance Extension Comment Letter
9-13-10 Reid-McConnell Flood Insurance Extension Comment Letter
6-23-10 Pelosi-Reid Flood Insurance Comment Letter