WASHINGTON (5/11/12)--The National Flood Insurance Program (NFIP) is scheduled to lapse at the end of this month, and the Credit Union National Association (CUNA) this week urged members of Congress to "extend the authority of this crucial program or pass comprehensive reform" soon to ensure that NFIP coverage continues.
Credit unions, as well as other lenders, cannot write certain mortgages without NFIP coverage. In the past the program has lapsed for brief periods--three times in 2010.
The CUNA letter noted that previous lapses in NFIP authorization have caused significant disruption in the mortgage underwriting process for thousands of prospective homeowners.
Sen. David Vitter's (R-La.) S. 2344 would extend the NFIP through the end of this year. That bill was discussed during a Wednesday Senate Banking Committee hearing. Representatives from flood-prone municipalities, insurance and realty groups, and a conservation organization testified at the hearing. Those who testified all agreed that long-term reauthorization of the NFIP is needed. Committee members also agreed that an extension is needed.
Vitter during the hearing said he would continue to promote his legislation, and would propose, as a floor amendment, his NFIP Senate bill.
Legislation that would extend the NFIP for five years has also been approved in the House and by the Senate Banking Committee. CUNA in the letter said it supports a portion of the House-passed bill (H.R. 1309) that would allow lenders or servicers to charge the borrower for the cost of premiums and fees incurred by the lender or servicer in cases where a borrower who is required to have flood insurance either cancels or lets the required policy lapse and then fails to purchase flood insurance within 45 days after notification of the lapse.
The Senate should include this common-sense language in any bill flood insurance bill it considers, the letter said.
Democrats and Republicans, including Senate Banking Committee Chairman Tim Johnson (D-S.D.) and ranking minority member Richard Shelby (R-Ala.), have agreed that the NFIP is in need of reform, but a comprehensive reform package has not been agreed to in the House or Senate.
CUNA this week joined the National Association of Home Builders, the Council of Insurance Agents and Brokers, and many other finance, insurance and construction groups to remind members of Congress that they could provide certainty for the housing market and strengthen our economic recovery continuing to ensure access to affordable flood insurance. (See related May 9 News Now story: CUNA, trades urge Senate to pass NFIP extension)
For the full CUNA letter, use the resource link.