Amidst all the talk about the first time home buyer tax credit closing date extension, a less talked about but equally important extension was passed by the Senate yesterday. The National Flood Insurance Program (NFIP), which had lapsed for a month, was extended to September 30th by the Senate yesterday.
The National Flood Insurance Program is the primary flood insurer in the United States because very few private insurers offer flood insurance. The program expired on May 31st because of a lack of funding, and since that time nearly 6 million homeowners in flood plains lacked flood insurance, which is especially problematic as hurricane season approaches.
Thousands of home sales in flood prone areas were held up because lenders will typically not fund mortgage loans for homes that are in a flood plain that do not have flood insurance. Because of the lack of private flood insurance, the closings for these homes were held up. A significant number of these borrowers were also attempting to close in time to claim the first time home buyer tax credit, so for them the absence of flood insurance was particularly troubling.
The extension is retroactive to whenever a homeowner applied for flood insurance during the suspension of the program. This is the fifth short term extension of the NFIP over the past year. Hopefully Congress will permanently fund the program at some point soon, but in the meantime, home sales in flood areas can start moving forward again.
Have you been affected by the suspension of the NFIP? Let us know in the comments section below.
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