Flood Insurance Availability Due to Lapse Again

With Congress deadlocked over a jobs bill, the authority of the Federal Emergency Management Agency to issue new flood insurance policies is expected to expire early next week. This would mark the second hiatus for the National Flood Insurance Program in two months. But lenders can still approve loans on properties in flood plains, according to guidance issued by the Federal Deposit Insurance Corp., Fannie Mae, and Freddie Mac during the NFIP lapse from April 1 to April 23. However, lenders must make sure the homebuyer completes a flood insurance application and pays the premium at closing. Once Congress re-authorizes the flood insurance program, FEMA will approve the pending applications. During the April hiatus, Realtors found that some lenders were willing to make loans based on the agencies' guidance, but others would not. The Federal Housing Administration issued guidance on the matter, saying it will "continue to insure single-family mortgages on homes where flood insurance is normally required but was not secured during the lapse in flood insurance coverage authority." The jobs bill (H.R. 4213) extends unemployment benefits, several tax provisions, along with a flood insurance extension until the end of September. The House passed the bill by a 215-204 vote on Friday afternoon. The Senate has already adjourned for the Memorial Day recess and won't take up the measure until the senators return on June 7.