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Senate panel approves NFIP extension
WASHINGTON (9/8/11)—The Senate Banking Committee Thursday approved by voice vote a bill to extend the National Flood Insurance Program (NFIP) for an another five years. The U.S. House last month overwhelmingly passed its version of a bill to extend the program, but before the extension can become law, the House and Senate must work out differences between their legislation. The House bill has a provision, backed by the Credit Union National Association, that would preserve the rights of credit unions to protect their collateral from flood hazards. The provision addresses situations where borrowers have allowed flood insurance to lapse, and clarifies that subsequent flood insurance purchased by a credit union, or other lender, would date back to the date the existing policy lapsed or became insufficient in coverage amount, including any premiums or fees incurred during the 45-day notification period. The Senate NFIP reform discussion draft, approved by the panel yesterday, includes a provision--opposed by CUNA--that would require all mortgage lenders to escrow for NFIP premiums. Current law only requires lenders that escrow for taxes and insurance to also escrow for NFIP premiums. CUNA has warned lawmakers the escrow requirement could drive some small mortgage lenders, including credit unions, out of the mortgage business because there is a significant cost involved with establishing escrow accounts, particularly for community banks, credit unions, and community-based lenders that have small lending volumes. CUNA Senior Vice President of Legislative Affairs Ryan Donovan said after the Senate committee vote Thursday that he expects there will be another temporary extension of NFIP before the House and Senate can resolve differences between their approaches to NFIP reform and approve a single bill for the president’s signature.


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