What you need to know about the National Flood Insurance Program (NFIP)

The NFIP is a program that was created by the United States Congress in 1968 under the National Flood Insurance Act. This program was created to provide incentives to property owners who purchased insurance protection administered by the government. An added protection is that communities who participated were required to use higher standards when rebuilding and as a result keep contractors and developers from building in flood zones. In exchange for participating in the program, the communities gain access to flood maps, mitigation assistance and subsidized insurance to prepay for future damage and recover more quickly from flooding.

The NFIP is set to expire on September 30, 2017 without Congressional Action. The National Association of REALTORS® (NAR) has been actively working with members of Congress to ensure strong pro-consumer legislation is passed. In May, HAR members discussed the NFIP with members of Congress during the 2017 Hill Visits. To date, the House Financial Services Committee has passed seven different bills each one addressing a different component of the NFIP. NAR supported six of the seven bills and opposed H.R. 2874, “The 21st Century Flood Reform Act”.

NFIP critics argue that the federal government should not be in the flood insurance business and that the NFIP needs to be privatized. NFIP supporters counter that private insurers would be selective and only choose to insure low-risk properties. Those in the middle, mitigation critics, argue that taxpayer dollars should not be invested in flood-prone properties.

The key issue is not to let the NFIP lapse. In the past, each lapse costs 40,000 property sales per month and without reauthorization, NFIP cannot issue or renew policies in 22,000 communities where flood insurance is required for a mortgage. You can take action by contacting your U.S. Congressional House and Senate members and urge them to pass a multiyear reauthorization with needed reforms to avoid a lapse and create uncertainty in the real estate market.

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