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Signing a Contract This Month? Is It in a Flood Zone?

The National Flood Insurance Program expires next at midnight on Sept. 30, 2020, which could affect contracts signed this month if the home is in a flood zone.

ORLANDO, Fla. – The National Flood Insurance Program (NFIP) will expire once again on Sept. 30, 2020, at midnight. If Congress fails to extend the program, that expiration could create problems for some real estate transactions since mortgage companies require coverage for homes in flood zones.

About 1,747,309 Florida homeowners had a flood insurance policy through the National Flood Insurance Program (NFIP) as of April 30, 2019, according to the National Association of Realtors® (NAR), with one in five Floridians (19%) relying on some level of NFIP coverage.

NAR says it’s “making every effort to secure a long-term reauthorization of the program,” but Congress has so far failed to agree on any long-term extension and has, instead, spent the last few years extending the current program to keep NFIP operating.

The NFIP Reauthorization Act (HR 3167) unanimously passed the Financial Services Committee on June 11, 2019 and is supported by NAR policy, but it hasn’t seen any movement lately. Several other bills have been introduced in the Senate, but no further action has been taken.

Extensions are often difficult – and sometimes NIFP expires altogether for a while – because Congressional and White House leaders attached the NFIP extension to a bigger issue – like a Continuing Resolution to keep the federal government operating until there is agreement on 2020 appropriation bills.

NAR is advocating for a long-term extension so that homebuyers and homeowners have access to the program while Congress continues to work on a more in-depth five-year reauthorization measure.

Florida homebuyers have some options if NFIP shuts down, notably a roster of private insurance companies that offer flood insurance policies. Mortgage companies generally want NFIP coverage but in some cases accept private insurance coverage as mandated by law.

© 2020 Florida Realtors®