How to handle an NFIP lapse
It's deja vu all over again. Reauthorization of the National Flood Insurance Program (NFIP) is in limbo. Congressional renewal of the program is part of a continuing resolution to raise the debt limit and fund the federal government – legislation continually caught up in a contentious fight over immigration.
The Thursday, Feb. 8 deadline to reauthorize the NFIP is the fourth one in recent months and follows a brief lapse in the program in mid-January. Congress and President Donald Trump agreed to short-term extensions of the program in late September, early December, late December and again last month.
FEMA recently issued a statement on the implications of a lapse:
FEMA and Congress have never failed to honor the flood insurance contracts in place with NFIP policyholders. In the unlikely event the NFIP’s authorization lapses, FEMA would still have authority to ensure the payment of valid claims with available funds.
However, FEMA would stop selling and renewing policies for millions of properties in communities across the nation. Property owners who are required to have flood insurance would be unable to complete new mortgage transactions. The National Association of Realtors estimates that a lapse might result in the delay or cancellation of approximately 40,000 home sale closings per month nationwide [emphasis added].
For specific guidance on handling a lapse, visit our online resources, which include a link to the recently issued FEMA Bulletin W-17069.