WASHINGTON (May 9, 2012) - A long-term extension of the National Flood Insurance Program (NFIP) before the current temporary extension expires on May 31, is critical to provide certainty and avoid further disruptions in real estate markets.
That was the message delivered today by National Association of Realtors® President Moe Veissi before the Senate Banking Subcommittee on Economic Policy about the need for long-term NFIP reauthorization and reform.
“As the leading advocate for housing issues, NAR knows that long-term reauthorization of the insurance program is essential to a properly functioning real estate market and would help provide the housing market with the certainty it needs for a meaningful recovery,” said Veissi, broker-owner of Veissi & Associates Inc., in Miami. “We urge Congress to act quickly to reauthorize the NFIP and not let this vital program lapse again. It is critical that homeowners continue to have access to available and affordable flood insurance to protect themselves against losses.”
For some time now, Congress has been approving short-term extensions of the NFIP authority to issue flood insurance policies while debate continues over comprehensive reforms to the program. Since 2008, there have been 17 short-term extensions, and twice authority has been allowed to expire, delaying or cancelling 1,300 real estate transactions each day, according to NAR research. During the June 2010 lapse, NAR survey data estimate that more than 40,000 home sales were stalled.
The short-term extensions and shutdowns have exacerbated uncertainty in real estate markets and are inhibiting long-term investments that are vital to the U.S. economic recovery, said Veissi. “Real estate markets are continuing to recover and cannot tolerate the instability of operating the NFIP by stopgap or shut down. This is not a responsible way to run the program, especially since 5.6 million home and business owners in 21,000 communities rely on it,” he said.
Veissi testified that damages from floods are a national problem requiring a federal solution. Flood disasters have been declared in every state during the past two decades as the result of melting snow, severe rain storms and hurricanes, and rising water along lakes, rivers, levees and dams. Over the past year alone, disasters were declared in more than half the country, including the Dakotas, Iowa, Kansas, Missouri, Nebraska, Ohio and Utah.
As a result of the unpredictable nature and high costs of floods there has never been an adequate private flood insurance market. The four largest insurers that write virtually all private flood policies are not an option for most homeowners, except for the highest net-worth owners or highest value properties, and usually at an average price of twice that of insurance through the NFIP.
Without the NFIP the only way for owners to rebuild their homes after a devastating flood is for the federal government to provide expensive post-disaster rebuilding assistance using taxpayer dollars.
In his testimony, Veissi said that NFIP reauthorization must be a top priority for Congress and urged the Senate to take up and pass the Flood Insurance Reform Act immediately. “Renewing and strengthening the long-term viability of the federal flood insurance program is critical to America’s homeowners and the economy,” he said.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.
Information about NAR is available at www.realtor.org. News releases are posted in the website’s “News and Commentary” tab. The National Association of Realtors® supports public policies and policymakers who support the positions of Realtors® and their clients and customers on private property rights, housing issues and homeownership, regardless of political party affiliation.