Although it features a rather shameless pitch to play a major role in a reorganized National Flood Insurance Program (NFIP), CoreLogic has published, in its Insights blog, some reassurance for homeowners living in flood-prone areas.  Stuart Pratt, Senior Vice President for Government and Industry Relations, addresses the status of NFIP as Congress looks at reauthorizing and perhaps substantially reforming it.  

NFIP was initially created in 1968 by the National Flood Insurance Act and is administered by the Federal Emergency Management Agency (FEMA).  Its aim is to provide affordable flood insurance and mitigate "negative externalities associated with flood disasters."  Flood insurance is required to be carried by homeowners with mortgages backed by any federal programs and by many private lenders if the insured property is in a Special Flood Hazard Area (SPFA).  Premium rates are set on individual properties depending on their location and elevation and are not negotiable.      

NFIP has been reauthorized multiple times since 1968, but usually on a short-term basis; there have been 12 such reauthorizations since 2008.  Pratt says the 115^th Congress is determined to break that cycle and pass a long-term reauthorization. This work is delegated to the Senate Banking, Housing, and Urban Affairs Committee and the House Financial Services Committee, both of which have made NFIP a priority and have held hearings and gathered input from both the public and private sectors regarding improvement.

In addition to reorganization, both committees hope to again open the program to participation by the private market.  The 2012 Biggert-Waters Flood Insurance Reform Act attempted to do this while at the same time drastically reducing or eliminating insurance subsidies for most properties and scaling back coverage on repetitive severe loss properties.  The reforms dissolved in confusion over which private insurance plans satisfied NFIP requirements and over skyrocketing premiums in flood-prone areas.  Biggert-Waters was effectively repealed two years later with passage of the Grimm-Waters Act.

The House, during the 114^th Congress, passed a bill, with more than 400 votes, coming from both sides of the aisle, that would increase private sector participation but it did not make it through the Senate. Pratt said that, despite this bi-partisan support, there are still several disagreements that need to be resolved, not partisan ones, but issues based on geography and history.

Pratt says there are members of Congress who represent coastal regions or SFHAs and those who live inland or in areas that are high and dry; there are representatives who were greatly affected by catastrophes such as Hurricane Katrina and Superstorm Sandy, and those who have had the fortune to avoid such natural disasters.  This reauthorization, he says, "truly embodies the well-known credo associated with former House Speaker Tip O'Neill that "all politics is local." 

This makes for divergent opinions, but Pratt says they do not appear unsurmountable, and hopefully will be brought to consensus over the summer. He expects both committees to undertake most of the hard work necessary to produce a bill, possibly even a clean one, prior to their August recess; one that will land on the President's desk well before the expiration of the program at the end of September.

He says that Congress understands they must pass this reauthorization bill.  They learned that the hard way when the program lapsed during the month of June 2010.  The National Association of Realtors estimates there were 46,886 home sale transactions lost, an average of 1,421 per day, while flood insurance was unavailable.  It well could happen again.