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Flood Insurance Program Extended For 60 Days |
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The National Flood Insurance Program (NFIP) was set to expire on May 31st. On May 30th, Congress passed a 60-day extension. Passage required a compromise. Congress agreed to a provision that creates a 4-year phase-out of rate subsidies on non-primary residences. The phase-out provision means that insurance rates on some non-primary residences could increase by 25% per year until premiums reach the full (actuarial) cost. While the first step increase is currently scheduled to take effect on July 1, 2012, the rest of the increases would be not fully phased-in for a minimum of 4 years.
Although NAR strongly objected to mixing provisions of the larger reform bill with the temporary extension, the elimination of the rate subsidies was a necessary compromise in the face of overwhelming bipartisan support in both the House and Senate for the provision.
Flood insurance is required by law to obtain a mortgage in more than 21,000 communities nationwide. A lapse would have affected 1,300 transactions a day or nearly 40,000 a month, a potentially devastating blow to the market recovery. NAR will continue to lobby for a 5-year reauthorization and reform bill |
