Lenders are backing lawmakers' move for another temporary extension for the National Flood Insurance Program, responsible for covering over 4.7 million homeowners.
Congress
A government shutdown would've precluded mortgage applicants from closing on home loans without the required coverage in federally designated flood zones. Existing coverage would continue through the end of their policy term, while NFIP borrowing from the government would be drastically reduced.
Capitol Hill's last-minute effort, with funding set to expire Sept. 30, comes on the eve of a hurricane expected to slam the Southeast, and amid
The Mortgage Bankers Association Wednesday morning called on Congress to pass its continuing resolution, which would also keep housing programs at federal agencies humming along.
"MBA urges the House – and then the Senate – to pass this temporary, but critical funding package to ensure the continuity of critical government programs and operations that support single-family and multifamily housing markets and consumers," said Bob Broeksmit, MBA president and CEO.
The NFIP has been
The program faces its own financial constraints, as it has over $20 billion in debt with a $30.4 billion borrowing limit. Past government extensions didn't provide additional funding for the program, according to a Congressional report.
Flood insurance woes are compounded with
Homeowners can access a private flood insurance market, but those policies can be more expensive, said Patty Brown, senior vice president of underwriting for Atlantic Bay Mortgage. The Virginia Beach-based lender says it works with the Community Home Lenders of America and government-sponsored enterprises on guidelines around insurance restrictions.
"They're not backed by the federal government, so repairs, or the insurance payments, are not going to be as quick as through the NFIP," she said of private flood insurers. "The coverage is more expensive, but it may not be enough."
Destructive flooding may cost
While some lawmakers, specifically both of Louisiana's Republican senators, have called on a
"It is a good program, it does work," she said. "As a lender we're working to make it easier for people to get into homes and not harder. So programs such as the NFIP are critical to our commitment to get people into homes."