WASHINGTON (6/28/12)--The Credit Union National Association (CUNA) on Wednesday urged members of the U.S. Congress to enact a five-year extension of the National Flood Insurance Program (NFIP) before the program's current authorization expires on July 31.
The Senate could vote this week on legislation that would extend the NFIP for five years and make some reforms to the program. Similar legislation has also been introduced in the House, but a vote on that legislation has not been scheduled.
While CUNA supports both the House and Senate NFIP extension bills, CUNA in the letter also asked legislators to include language addressing force-placed flood insurance in a final version of NFIP legislation.
Forced-place insurance is an insurance policy taken out by a lender or creditor when a customer does not carry insurance on an asset. The charges for this insurance are passed on to the customer.
The House bill includes language that would allow lenders to charge borrowers for costs of premiums and fees incurred by the lender after borrowers required to have flood insurance either cancel or let the required policy lapse--and then fail to purchase flood insurance within 45 days after notification of that lapse.
"This language is important because it removes any ambiguity and clarifies that in such cases the lender or servicer may charge the borrower for the premiums or fees incurred for coverage beginning on the date which flood insurance coverage lapsed or did not provide a sufficient coverage amount," wrote CUNA President and CEO Bill Cheney. "We hope this language can be included in the bill that Congress ultimately enacts," he added.
The NFIP is scheduled to expire on July 31.