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Congress grants National Flood Insurance Program a reprieve

Publish Date: March 22, 2024

Written by Matt Carter

- Originally published at Inman News - Matt Carter

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A $1.2 trillion funding bill passed by the House of Representatives to head off a partial government shutdown would extend the National Flood Insurance Program through the end of September and do so retroactively, even if the Senate doesn’t meet a deadline for passing the bill by midnight.

Mortgage Bankers Association President and CEO Bob Broeksmit said the trade group “commends congressional leaders and appropriators for including an extension of the National Flood Insurance Program” in the bill.

“Importantly, that provision was carefully crafted to be retroactive, avoiding any disruption in flood insurance authorities” should the Senate not meet tonight’s statutory deadline, Broeksmit said.

The Further Consolidated Appropriations Act of 2024 passed the House by a whisker Friday, over objections from conservative Republicans including Rep. Marjorie Taylor Greene, who filed a motion to remove Speaker of the House Mike Johnson from his position as votes were being cast.

The motion to suspend the rules and pass the funding bill required a two-thirds majority, or 285 of the 432 members present, to pass. It received 286 votes, with 185 Democrats and 101 Republicans supporting the bill.

More Republicans (112) voted against the bill than supported it, with some complaining that the 1,012-page bill hammered out by negotiators was released just 32 hours before a vote, and contained hundreds of earmarks for members’ pet projects, Politico reported.

Republican backers said the package of appropriations bills achieves $200 billion in spending cuts over 10 years, “strategically increasing defense spending, rescinding wasteful Democrat spending, and making targeted cuts to overfunded non-defense programs.”

In a statement released Thursday, The White House said the bill rejects “extreme spending cuts and harmful riders proposed by House Republicans” while expanding access to affordable child care and supporting early childhood education through Head Start.

According to the National Association of Realtors, if the bill had not passed, the National Flood Insurance Program (NFIP) would not have been able to sell or renew flood insurance policies after 11:59 pm Eastern time on March 22, 2024.

Existing NFIP policies would have remained in effect until their expiration date, and claims would have continued to be paid “as long as FEMA has the funds on hand,” NAR said in a website FAQ.

With a crisis averted for now, Broeksmit said the MBA “will work with policymakers on both sides of the aisle on a long-term reauthorization of this critical program.”

Created in 1968 to help protect homeowners from flood losses and encourage sound land uses, the NFIP collects $4.6 billion in premiums, fees and surcharges from 4.7 million homeowners, providing more than $1.3 trillion in coverage.

Would-be homebuyers who want to buy in flood-prone areas generally cannot be approved for a mortgage without obtaining such coverage, either from the government or from private insurers.

The government’s flood insurance program was intended to be self-sustaining, but many homeowners pay subsidized premiums that have not been sufficient to cover rising claims that have left the NFIP saddled with billions of dollars in debt that often leaves it at the mercy of Congress.

Congress canceled $16 billion in NFIP debt in 2017, but the program owes more than $20.5 billion to the U.S. Treasury, leaving it with less than $10 billion in borrowing authority, the Congressional Research Service reported in January.

The NFIP’s administrator, the Federal Emergency Management Agency (FEMA), is in the process of implementing controversial risk-based premium increases that a number of states are challenging in court.

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