The reversal of FEMAs' prior policy calms concerns that loan closings would be jeopardized
by Duffie Osental
The Federal Emergency Management Agency (FEMA) announced that it will issue and renew flood insurance policies under the National Flood Insurance Program (NFIP) during the partial shutdown of the US government, calming the nerves of many realtors and mortgage professionals who are in the middle of closing a loan.
Earlier in December, FEMA issued a new opinion disallowing new or renewal flood insurance policies during the partial shutdown of the federal government, despite Congress passing legislation that extends the National Flood Insurance Program until May 31, 2019. Under pressure from the National Association of Realtors (NAR) and the Mortgage Bankers Association (MBA), FEMA reversed its decision last week.
The mortgage industry in particular voiced concerns that the inability to secure the required flood insurance could jeopardize loan closings.
"FEMA and the Administration deserve credit for hearing our concerns and acting swiftly to address them," said John Smaby, president of the NAR. "This new decision means thousands of home sale transactions in communities across the country can go forward without interruption, as Congress intended when it renewed the flood insurance program earlier this week. Our research has shown that 40,000 home sales are lost every month that flood insurance is not available."
"We thank the Administration and Congress for stepping up so quickly to ensure the smooth continuation of flood insurance at a time when market disruption would be extremely hard-felt," said Shannon McGahn, senior vice president of government affairs at NAR.