Sep 30, 2022 Flood Compliance
The National Flood Insurance Program (NFIP) will expire on September 30, 2022. Congress is currently expected to vote on a continuing resolution to extend federal government funding, including the NFIP, through December 16, 2022.
If the reauthorization is not issued by 11:59 p.m. on September 30th, Proctor Loan Protector would like to draw attention to guidance previously issued by agencies that address lapses in FEMA’s authority under the NFIP. This guidance provides answers to frequently asked questions and entities’ responsibilities. For complete details, please review the guidance below:
- FEMA: w-21023 (floodsmart.gov)
- Federal Agencies: Agencies Issue Statement on Financial Institutions Issuing Loans When National Flood Insurance Program is Unavailable
- Interagency Q&As Regarding Flood Insurance: Agencies Release Revised Interagency Questions and Answers Regarding Flood Insurance (occ.gov) – See Applicability 12
Based on the guidance referenced above, the following are some high-level changes that would occur:
- Write Your Own and NFIP direct agents cannot issue policies for new business or increase coverage if the application or request to increase is dated after 11:59 pm Eastern time on September 30, 2022. However, applications and requests to increase coverage dated prior to the lapse may be honored depending on the date the insurer receives the application/request, and whether policy premium was received before the applicable deadline.
- Renewal notices may not be issued during the lapse, but renewal offers prior to the lapse will be honored if the insurer receives the renewal premium within the applicable grace period.
- Existing NFIP policies will remain in effect until their expiration date (i.e., the renewal date plus a 30-day grace period), and claims will continue to be paid as long as FEMA has the funds on hand.
- The federal requirement to purchase flood insurance is suspended, which means it is up to lenders to decide whether to make loans in Special Flood Hazard Areas while NFIP insurance is not available. Lenders must continue to make flood determinations, provide timely, complete, and accurate notices to borrowers, and comply with other applicable requirements of the regulations. Upon reauthorization of the NFIP, lenders are expected to ensure that flood insurance will be purchased promptly for loans closed without flood insurance during the lapse.
- Private flood insurance backed by a source other than NFIP are not affected. An expiration of the NFIP program would also not affect your lender-placed flood insurance program with Proctor Loan Protector.
Proctor Loan Protector will continue to monitor this topic and provide updates as they develop.
Friday, July 15, 2022
HYDE-SMITH, COLLEAGUES MOVE TO EXTEND NATIONAL FLOOD INSURANCE PROGRAM
Measure Required as Current NFIP Program Expires September 30
WASHINGTON, D.C. – U.S. Senator Cindy Hyde-Smith (R-Miss.) on Thursday helped introduce legislation to authorize a one-year extension to the National Flood Insurance Program (NFIP), which is set to expire on Sept. 30, 2022.
The NFIP Extension Act of 2022 (S.4533) would extend the NFIP through Sept. 30, 2023.
“I look forward to a time when Congress will agree on a long-term reauthorization of the NFIP. Until then, I recognize the importance of the NFIP to many Mississippi families and businesses and will act to see that the program does not lapse,” Hyde-Smith said.
U.S. Senator John Kennedy (R-La.) introduced the extension measure, with Senators Bill Cassidy, M.D. (R-La.) and Marco Rubio (R-Fla.) as additional original cosponsors.
More than 5 million American families and businesses, including over 60,000 NFIP policyholders in Mississippi, that depend on NFIP coverage. The program is administered by the Federal Emergency Management Agency.
In November 2021, Hyde-Smith cosponsored a five-year NFIP reauthorization bill that includes reforms to assist policyholders and ensure the long-term success of the program.
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WASHINGTON – Sen. John Kennedy (R-La.) today introduced the National Flood Insurance Program (NFIP) Extension Act of 2022 along with Sens. Cindy Hyde-Smith (R-Miss.), Marco Rubio (R-Fla.) and Bill Cassidy (R-La.). The legislation would prevent the NFIP from expiring on September 30, 2022.
The bill extends the NFIP for one year, until September 30, 2023.
“Louisiana’s families rely on their flood policies to help them when bad weather wrecks their homes and businesses. Between storms and flooding, I can’t express enough how important extending the NFIP is for my state, especially now that we’re in the middle of hurricane season,” said Kennedy.
Of the 5 million Americans nationwide who rely on the NFIP, roughly 500,000 are Louisianians who need the program to protect their businesses and homes.
Text of the NFIP Extension Act of 2022 is available here.