WASHINGTON (6/14/12)—Legislation that would extend the National Flood Insurance Program (NFIP) into 2013 could soon be considered in the U.S. Senate.
The bill, S. 1940, was introduced by Senate Banking Committee Chairman Tim Johnson (D-S.D.) late last year, and has passed that committee. In addition to extending the NFIP, it would also grant the Federal Emergency Management Agency (FEMA) the authority to issue up to $20.7 billion in debt obligations for the NFIP, until 2016. However, that funding authorization would be subject to presidential approval under the terms of the bill.
Legislation that extends the NFIP until July 31 was approved in the House and Senate late last month, just before the insurance program expired on May 30. The NFIP has been funded by a series of short-term extensions for some time, and Johnson and others in the Senate and House have repeatedly called for substantial reforms to the program to be made if and when the program is reauthorized for a longer term.
Credit unions, as well as other lenders, cannot write certain mortgages without NFIP coverage, and the Credit Union National Association has noted that lapses in NFIP authorization have caused significant disruption in the mortgage underwriting process for thousands of prospective homeowners.
The NFIP lapsed three brief times in 2010.
Senate Majority Leader Harry Reid (D-Nev.) and Sen. David Vitter (R-La.) are reportedly working on legislation that would extend the NFIP for five years. Vitter earlier this year introduced his own yearlong NFIP extension, but that bill (S. 2344) has not received a vote.
Sen. Richard Shelby (R-Ala.) last year said that every aspect of the NFIP must undergo significant revision for it to survive and continue on a sustainable path. He suggested the committee examine the relationship between the NFIP and participating insurance companies, with particular attention paid to increasing transparency and accountability. The types of properties that the NFIP is covering should also be examined to ensure that its resources are spent effectively, and privatization of portions of the program should also be considered, Shelby added.