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Your Closing May Be Delayed If You Need Flood Insurance

In closing, Distressed Sales, First-Time Buyer, flood insurance, florida, government, Home Buyer, home sellers, Industrial Real Estate, insurance, lenders, miami, miami beach, Military, mortgage, new rules, real estate, Sellers, Short Sales on March 29, 2010 at 5:37 pm

Flood insurance on hiatus

WASHINGTON – March 29, 2010 – The Senate adjourned last week without approving H.R. 4851, which would have extended a number of programs, including the National Flood Insurance Program (NFIP).

Authority for the NFIP expired at midnight on Sunday, March 28. That change impacts all home closings that require a flood policy, unless the policy was issued before Sunday.

Homeowners who hold flood insurance policies still have coverage; but NFIP cannot issue new policies, increase coverage on existing policies or issue renewal policies. Once Congress authorizes the program again, however, it’s expected to make it retroactive.

“This is now the third time in recent months that the National Flood Insurance Program has been allowed to lapse, and each time for reasons that have little or nothing to do with the program itself,” National Association of Mutual Insurance Companies’ spokesman Matt Brady says. Brady notes that this lapse, like the others before it, will have a “serious impact” on homebuyers in flood zones who hope to close on a home during the inactive period.

Efforts to reach a bipartisan flood agreement last week in the U.S. House and Senate failed over discussions on how to pay for the broader bill, which included other programs. While passage is still not assured the week of April 12, a procedural motion has been filed in the Senate setting up a vote.

The National Association of Realtors® says it has stressed the importance of the NFIP program to Congress, and NFIP’s role in the real estate market. NAR hopes to not only see the program extended in April, but to also forge a long-term solution that extends the program as long as possible.

According to a letter from U.S. Department of Homeland Security Division Director Dennis L. Kuhns, Bulletin W-09068 – “Recommendations/Guidance for Possible NFIP Authority Lapse and Hiatus, issued Oct. 27, 2009 – should be used as a reference on how the program operates during a hiatus.

The Bulletin can be downloaded (PDF format) at: http://www.nfipiservice.com/stakeholder/pdf/bulletin/w-09068.pdf

Reprinted by permission: © 2010 Florida Realtors®

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