NAR: FEMA’s Flood Insurance Pause Jeopardizes Housing
December 27, 2018
Several real estate industry groups, including the National Association of REALTORS®, expressed disappointment over FEMA’s decision to not renew or issue new flood insurance policies during the partial shutdown of the federal government.
The ruling is contrary to Congress’ intent to keep the National Flood Insurance Program fully funded through May 31, 2019, housing groups say. It’s also in conflict with FEMA’s previous decision to allow NFIP operations as it did during a 16-day government shutdown in 2013. NAR is “extremely disappointed by this abrupt and ill-conceived change of course,” says Shannon McGahn, NAR’s senior vice president of government affairs.
NFIP provides up to $350,000 of flood insurance coverage where it’s required for a federally backed mortgage in 22,000 communities across the country. The NFIP is the primary source of protection against flooding, the most common and costly natural disaster in the U.S.
“Last week, Congress passed legislation to fully reauthorize the NFIP through May,” McGahn said in a statement on Wednesday. “However, [Wednesday’s] surprise FEMA ruling jeopardizes tens of thousands of home sales across America, as NAR estimates up to 40,000 closings are disrupted each month that the NFIP cannot issue flood insurance policies. NAR will continue carefully reviewing this ruling and we remain in communication with Congress and FEMA to remedy the situation as quickly as possible.”
The National Association of Home Builders echoed NAR’s disappointment in Wednesday’s ruling.
“FEMA’s short-signed action threatens to wreak havoc in many real estate markets from coast to coast at a time when the nation is already struggling through a housing affordability crisis,” says Randy Noel, chairman of the NAHB. “By refusing to renew or sell flood insurance policies as a result of the federal shutdown, FEMA is not only thwarting congressional intent, but also hurting countless homeowners across the nation who reside in flood-prone areas and rely on the NFIP to protect their properties against the risk of flooding. … A failure to act responsibly will have devastating consequences for the housing market.”
Updated: January 15, 2019