Flood insurance reform’s future uncertain
 

WASHINGTON – April 11, 2007 – The flood insurance reform bill that House Financial Services Committee Chair Barney Frank (D-Mass.) introduced in March could clear his panel and the full House this year, but momentum on legislation in the Senate is up in the air.

Senate Banking Committee Chairman Chris Dodd (D-Conn.) may be more focused on a bid for the White House; and Sen. Richard Shelby (R-Ala.), the top Republican on the panel, previously has supported tougher reforms not likely to be endorsed by the financial services industry.

The industry also opposes provisions in Frank’s bill that would raise penalties for lenders that fail to enforce the law and would end an insurance subsidy on vacation and secondary homes, but insiders agree that some changes to the National Flood Insurance Program are needed to make it easier to sell mortgages in regions that are more vulnerable to flooding.

“The mortgage lending community has expressed their concern about mandatory escrow and some of the penalties associated with coverage dropping,” notes Andrew Barbour, a lobbyist for the Financial Services Roundtable, who speculates that action could come next year when the program is due to expire.
 

Source: American Banker (04/10/07) P. 5; Kaper, Stacy
 

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