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NAHB on June 23 expressed support for a five-year extension of the National Flood Insurance Program (NFIP) to ensure that the federally backed flood insurance program remains efficient and effective in protecting flood-prone properties and creates more stability in the housing market.
Testifying before the Senate Banking Committee, Barry Rutenberg, first vice chairman of NAHB, told lawmakers that the series of short-term extensions of the NFIP over recent years has created a high level of uncertainty in the program and caused severe problems for the nation’s already troubled housing markets.
“Unfortunately during this latest interruption, many home buyers faced delayed or cancelled closings due to the inability to obtain NFIP insurance for a mortgage,” said Rutenberg.
“In other instances, builders themselves were forced to halt or postpone construction on a new home due to the lack of flood insurance approval, adding unneeded delay and job loss,” he said.
A long-term extension of the program, he said, “will ensure the nation’s real estate markets operate smoothly and allow the nation’s home builders to continue to provide safe, decent and affordable housing to consumers.”
The current reauthorization of the program expires on Sept. 30.
While NAHB supports reforms of the NFIP to ensure its financial stability, Rutenberg urged lawmakers to proceed with care, noting that steps that Congress takes to bolster the program’s balance sheet have the potential to greatly impact housing affordability and the ability of local communities to exercise control over their growth and development options.
To improve the solvency of the program and its attractiveness to potential policy holders, NAHB supports several reforms designed to allow the Federal Emergency Management Agency (FEMA) and the NFIP to better adapt to changes in risk, inflation and the marketplace:
- Creating a more expansive “deluxe” flood insurance option — or a menu of insurance options from which policyholders could pick and choose — could provide additional home-owner benefits while aiding program solvency.
- Raising the minimum deductible for paid claims would provide a strong incentive for home owners to mitigate and protect their homes, thereby reducing potential future losses to the program.
- Establishing a Technical Mapping Advisory Council, as described in House bill H.R. 1309, would ensure the scientific validity of Flood Insurance Rate Maps.
- Keeping the Special Flood Hazard Area and any mapping to the 100-year flood level (1% annual flood risk), because any expansion would substantially increase the cost of home construction and severely impact housing affordability.
Established in 1968, the NFIP offers affordable flood insurance to home owners and businesses in flood plains and other low-lying areas that otherwise might not be able to obtain coverage.
More than 20,000 communities nationwide participate in the insurance program, which currently covers about 5.5 million policyholders.
To read H.R. 1309, click here and enter the bill number in the box at the upper center of the screen.
For more information, email Kedrin Simms Brachman at NAHB, or call her at 800-368-5242 x8413.