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Five-year NFIP extension okayed by House Senate
WASHINGTON (7/2/12)--A long-term extension of the National Flood Insurance Program (NFIP) awaits the signature of the president and with that stroke of a pen the program receives an extension through 2017. The Credit Union National Association (CUNA) has strongly supported the extension.

On Friday the U.S. House passed the five-year extension of the flood insurance program by a vote of 373-52, and the Senate quickly followed suit and approved its version of the legislation, 74-19.

The next stop is the White House, where the president is expected to sign the extension into law well before the program's current July 31 expiration date.

CUNA President/CEO Bill Cheney said this action of Congress "provides credit unions with certainty for the future of the National Flood Insurance Program for the foreseeable future. CUNA and credit unions have been encouraging Congress to approve a multi-year authorization for several years for this important program. This comes in the wake of the NFIP being subject to almost a dozen short-term extensions since the last time it enjoyed a long-term extension.

"There have even been some instances of Congress allowing flood insurance to lapse, which had complicated the mortgage lending process. Congress' action will ensure that credit unions--and the consumers that they serve--can have a much greater degree of confidence in the lending process and the prospect of financing their homes."

Earlier last week, CUNA urged Senate lawmakers to include language addressing force-placed flood insurance in its 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.

The final version of the Senate NFIP adopted the CUNA-sought provision.

The flood insurance program was established in 1968 and is administered by the Federal Emergency Management Agency (FEMA). Prior to its existence, many homeowners, renters and businesses were unable to insure against flood losses because private insurers did not offer such coverage or because it was unaffordable.

Flood insurance is required by law in flood zone areas that are designated by recently updated FEMA maps. It is a necessary purchase by prospective homeowners before credit unions or other lenders can offer mortgages and other related products to homebuyers.

CUNA has worked diligently to convince Congress to extend the NFIP program because previous lapses in NFIP authorization have caused significant disruption in the mortgage underwriting process for thousands of prospective homeowners.


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