As insurance and real estate agents and homeowners feared, Congress left Washington on March 26 without extending the National Flood Insurance Program. Congress adjourned until April 12 after failing to agree on an unemployment benefits bill that included a provision with an extension of the NFIP.
As a result, the federal flood insurance program’s authority to write new policies ends on Sunday, March 28, at midnight. After that time, insurance agents will not be able to provide new or renewal flood insurance policies, which are required by lenders to close on some real estate sales.
A similar hiatus occurred at the end of February and the NFIP was closed for several days until Congress renewed it on March 2. But this time the hiatus will be longer, as Congress is not scheduled to reconvene until April 12. At that time, Congress could renew NFIP retroactively.
While no new policies can be issued during a lapse in NFIP authorization, consumers with current flood insurance policies remain covered. Claims payments are not affected. But in a time when the real estate market is just crawling out of the basement, this will delay any real estate closings for properties in flood hazard areas where mortgage financing is required.
Chances are good however that congress will pass this measure when they return and make it retro-active back to March 28th.