MBA Call to Action: Reauthorize and Reform the NFIP

With the National Flood Insurance Program set to expire on September 30, the Mortgage Bankers Association Mortgage Action Alliance issued a Call to Action to ensure three MBA priorities are included in the final legislation passed by the full House.

MBA has been a key player in the Financial Services Committee and House Leadership negotiations surrounding legislation to reauthorize the NFIP and to provide key reforms to the program. After the August recess, MBA Senior Vice President of Legislative and Political Affairs Bill Killmer said MBA expects the House to consider a package of bills that will reauthorize and reform the program. 

The Call to Action asks its members to contact their Representatives to ensure that the following three priorities are included in the final legislation:

Long-term reauthorization. A long-term extension of the NFIP is vital to provide certainty to homeowners and small businesses that depend on the program for flood damage protection, to protect our residential and commercial real estate markets and to provide stability for the companies and agents that sell and administer NFIP policies to millions of consumers across the country.

The current House proposal would reauthorize the NFIP for five years.

Exemption for commercial and multifamily properties. Imposing the NFIP structure which was designed for “one borrower, one home, one policy” on commercial and multifamily transactions is difficult for borrowers and lenders. The current limit of $500,000 for commercial and multifamily properties is insufficient based on the value of many of the properties in question.

The current House proposal eliminates the NFIP’s mandatory purchase requirement for all commercial properties, as well as certain residential properties not related to single family loan programs. Importantly, NFIP remains an option for anyone who wishes to still use the program for commercial/multifamily buildings.

Development of the private flood insurance market. To ensure a stable, affordable and sustainable flood insurance market, a private market for flood insurance must be allowed and encouraged to develop. Increasing private sector involvement also could benefit consumers by expanding available insurance coverage options, lowering costs and increasing the number of at-risk properties that are insured.

The current House proposal addresses two of the primary impediments to the development of a private flood insurance market: lack of clarity as to what constitutes acceptable private flood insurance and uncertainty about the effect of private insurance on the continuous coverage requirement

Click take action through MAA to ensure legislation provides long-term reauthorization of the NFIP, an exemption for commercial and multifamily properties, and that helps the development of the private flood insurance market.

“It is critical that the House act on this issue as soon as it returns from its August recess,” Killmer said.