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"https://crsreports.congress.gov/product/details?prodcode=IN10835", "type": "CRS Insight" }, { "source": "EveryCRSReport.com", "id": 612406, "date": "2019-12-30", "retrieved": "2020-01-04T23:16:37.072485", "title": "What Happens If the National Flood Insurance Program (NFIP) Lapses?", "summary": "This Insight provides a short overview of what would happen if the National Flood Insurance Program (NFIP) were not to be reauthorized by September 30, 2020, and allowed to lapse. \nExpiration of Certain NFIP Authorities\nThe National Flood Insurance Program (NFIP) is authorized by the National Flood Insurance Act of 1968 (Title XIII of P.L. 90-448, as amended, 42 U.S.C. \u00a7\u00a74001 et seq.). The NFIP does not contain a single comprehensive expiration, termination, or sunset provision for the whole of the program. Rather, the NFIP has multiple different legal provisions that tie to the expiration of key components of the program.\nSince the end of FY2017, 15 short-term NFIP reauthorizations have been enacted. The NFIP is currently authorized until September 30, 2020. Authorization of the NFIP was extended from September 30 until December 8, 2017 (P.L. 115-56), extended until December 22, 2017 (P.L. 115-90), and again until January 19, 2018 (P.L. 115-96). The NFIP lapsed between January 20 and January 22, 2018, and received a fourth short-term reauthorization until February 8, 2018 (P.L. 115-120). This legislation also authorized FEMA to honor all policy-related transactions accepted during the NFIP lapse. The NFIP lapsed again for approximately eight hours during a brief government shutdown in the early morning of February 9, 2018, and was then reauthorized until March 23, 2018 (P.L. 115-123). The NFIP received a 6th reauthorization until July 31, 2018 (P.L. 115-141), a 7th until November 30, 2018 (P.L. 115-225), an 8th until December 7, 2018 (P.L. 115-281), a 9th until December 21, 2018 (P.L. 115-298), a 10th until May 31, 2019 (P.L. 115-396), an 11th until June 14, 2019 (P.L. 116-19), a 12th until September 30, 2019 (P.L. 116-20), a 13th until November 21, 2019 (P.L. 116-59), a 14th until December 20, 2019 (P.L. 116-69), and a 15th reauthorization until September 30, 2020 (P.L. 116-93).\nThe cancellation of $16 billion of NFIP debt (P.L. 115-72) has no effect on the impact of a lapse of NFIP authorization. Unless reauthorized or amended by Congress, the following will occur on September 30, 2020:\nThe authority to provide new flood insurance contracts will expire. Flood insurance contracts entered into before the expiration would continue until the end of their policy term of one year. \nThe authority for NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion. \nOther activities of the program would technically remain authorized, such as the issuance of Flood Mitigation Assistance Grants. However, the expiration of the key authorities listed above would have potentially significant impacts on the remaining NFIP activities. \nThe NFIP is the primary source of flood insurance coverage for residential properties in the United States. The NFIP has more than 5 million flood insurance policies providing over $1.3 trillion in coverage, with over 22,000 communities in 56 states and jurisdictions participating. The program collects about $4 billion in annual premium revenue and fees.\nIf there were to be a lapse in authorization on or after September 30, 2020, and the borrowing authority is reduced to $1 billion, FEMA would continue to adjust and pay claims as premium dollars come into the National Flood Insurance Fund (NFIF) and reserve fund. If the funds available to pay claims were to be depleted, claims would have to wait until sufficient premiums were received to pay them unless Congress were to appropriate supplemental funds to the NFIP to pay claims or increase the borrowing limit. \nThe Mandatory Purchase Requirement\nThe expiration of the NFIP\u2019s authority to provide new flood insurance contracts has potentially significant implications due to the mandatory purchase requirement. By law or regulation, federal agencies, federally regulated lending institutions, and government-sponsored enterprises must require certain property owners to purchase flood insurance as a condition of any mortgage that these entities make, guarantee, or purchase. Property owners, both residential and commercial, are required to purchase flood insurance if their property is identified as being in a Special Flood Hazard Area (SFHA, which is equivalent to having an estimated 1% or greater risk of flooding every year) and is in a community that participates in the NFIP. Without available flood insurance, real estate transactions in an SFHA potentially would be significantly hampered. \nIn the Biggert-Waters Flood Insurance Reform Act of 2012 (Title II of P.L. 112-141), Congress explicitly allowed federal agencies to accept private flood insurance to fulfill this mortgage requirement if the private flood insurance met the conditions defined in statute. The private flood insurance market, however, has been slow to develop, and the mandatory purchase requirement is still generally met through NFIP coverage.\nPast Lapses of the NFIP\nThe NFIP was extended 17 times between 2008 and 2012, and lapsed 4 times: March 1 to March 2, 2010; March 29 to April 15, 2010; June 1 to July 2, 2010; and October 1 to October 5, 2011. In most cases when the NFIP lapsed, Congress reauthorized the NFIP retroactively. During these NFIP lapses, the FDIC issued guidance to lending institutions, and the Federal Reserve also issued informal guidance to lenders. FEMA provided guidance for the Write-Your-Own (WYO) Program, where private insurance companies are paid to write and service NFIP policies.\nIn past NFIP lapses, borrowers were not able to obtain flood insurance to close, renew, or increase loans secured by property in an SFHA until the NFIP was reauthorized. During the lapse in June 2010, estimates suggest over 1,400 home sale closings were cancelled or delayed each day, representing over 40,000 sales per month. These figures applied to residential properties, but commercial properties were also affected by the NFIP lapse. In addition, the largest WYO insurer left the NFIP in 2011, reportedly because of the administrative burden associated with very short-term reauthorizations and lapses in authorization. Although no detailed analysis of the NFIP lapses in 2010 and 2011 has been undertaken, the economic impact could have been broader than the reported effects on the domestic real estate market.", "type": "CRS Insight", "typeId": "INSIGHTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "https://www.crs.gov/Reports/IN10835", "sha1": "1fa5f7f11123eb9e5ccdbd7aacd4f6f00f9a9784", "filename": "files/20191230_IN10835_1fa5f7f11123eb9e5ccdbd7aacd4f6f00f9a9784.html", "images": {} }, { "format": "PDF", "encoding": null, "url": "https://www.crs.gov/Reports/pdf/IN10835", "sha1": "58ad02ace90f7dcf1ceae57c7551ad37140e90f6", "filename": "files/20191230_IN10835_58ad02ace90f7dcf1ceae57c7551ad37140e90f6.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4845, "name": "Federal Emergency Management" } ] }, { "source": "EveryCRSReport.com", "id": 610183, "date": "2019-11-26", "retrieved": "2019-12-13T15:12:34.395862", "title": "What Happens If the National Flood Insurance Program (NFIP) Lapses?", "summary": "This Insight provides a short overview of what would happen if the National Flood Insurance Program (NFIP) were not to be reauthorized by December 20, 2019, and allowed to lapse. \nExpiration of Certain NFIP Authorities\nThe National Flood Insurance Program (NFIP) is authorized by the National Flood Insurance Act of 1968 (Title XIII of P.L. 90-448, as amended, 42 U.S.C. \u00a7\u00a74001 et seq.). The NFIP does not contain a single comprehensive expiration, termination, or sunset provision for the whole of the program. Rather, the NFIP has multiple different legal provisions that tie to the expiration of key components of the program.\nSince the end of FY2017, 14 short-term NFIP reauthorizations have been enacted. The NFIP is currently authorized until December 20, 2019. Authorization of the NFIP was extended from September 30 until December 8, 2017 (P.L. 115-56), extended until December 22, 2017 (P.L. 115-90), and again until January 19, 2018 (P.L. 115-96). The NFIP lapsed between January 20 and January 22, 2018, and received a fourth short-term reauthorization until February 8, 2018 (P.L. 115-120). This legislation also authorized FEMA to honor all policy-related transactions accepted during the NFIP lapse. The NFIP lapsed again for approximately eight hours during a brief government shutdown in the early morning of February 9, 2018, and was then reauthorized until March 23, 2018 (P.L. 115-123). The NFIP received a sixth reauthorization until July 31, 2018 (P.L. 115-141), a seventh until November 30, 2018 (P.L. 115-225), an eighth until December 7, 2018 (P.L. 115-281), a ninth until December 21, 2018 (P.L. 115-298), a tenth reauthorization until May 31, 2019 (P.L. 115-396), an eleventh reauthorization until June 14, 2019 (P.L. 116-19), a twelfth reauthorization until September 30, 2019 (P.L. 116-20), a thirteenth reauthorization until November 21, 2019 (P.L. 116-59), and a fourteenth until December 20, 2019 (P.L. 116-69).\nThe cancellation of $16 billion of NFIP debt (P.L. 115-72) has no effect on the impact of a lapse of NFIP authorization. Unless reauthorized or amended by Congress, the following will occur on December 20, 2019:\nThe authority to provide new flood insurance contracts will expire. Flood insurance contracts entered into before the expiration would continue until the end of their policy term of one year. \nThe authority for NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion. \nOther activities of the program would technically remain authorized, such as the issuance of Flood Mitigation Assistance Grants. However, the expiration of the key authorities listed above would have potentially significant impacts on the remaining NFIP activities. \nThe NFIP is the primary source of flood insurance coverage for residential properties in the United States. The NFIP has more than 5 million flood insurance policies providing over $1.3 trillion in coverage, with over 22,000 communities in 56 states and jurisdictions participating. The program collects about $4 billion in annual premium revenue and fees.\nIf there were to be a lapse in authorization on or after December 20, 2019, and the borrowing authority is reduced to $1 billion, FEMA would continue to adjust and pay claims as premium dollars come into the National Flood Insurance Fund (NFIF) and reserve fund. If the funds available to pay claims were to be depleted, claims would have to wait until sufficient premiums were received to pay them unless Congress were to appropriate supplemental funds to the NFIP to pay claims or increase the borrowing limit. \nThe Mandatory Purchase Requirement\nThe expiration of the NFIP\u2019s authority to provide new flood insurance contracts has potentially significant implications due to the mandatory purchase requirement. By law or regulation, federal agencies, federally regulated lending institutions, and government-sponsored enterprises must require certain property owners to purchase flood insurance as a condition of any mortgage that these entities make, guarantee, or purchase. Property owners, both residential and commercial, are required to purchase flood insurance if their property is identified as being in a Special Flood Hazard Area (SFHA, which is equivalent to having an estimated 1% or greater risk of flooding every year) and is in a community that participates in the NFIP. Without available flood insurance, real estate transactions in an SFHA potentially would be significantly hampered. \nIn the Biggert-Waters Flood Insurance Reform Act of 2012 (Title II of P.L. 112-141), Congress explicitly allowed federal agencies to accept private flood insurance to fulfill this mortgage requirement if the private flood insurance met the conditions defined in statute. The private flood insurance market, however, has been slow to develop and the mandatory purchase requirement is still generally met through NFIP coverage.\nPast Lapses of the NFIP\nThe NFIP was extended 17 times between 2008 and 2012, and lapsed 4 times: March 1 to March 2, 2010; March 29 to April 15, 2010; June 1 to July 2, 2010; and October 1 to October 5, 2011. In most cases when the NFIP lapsed, Congress reauthorized the NFIP retroactively. During these NFIP lapses, the FDIC issued guidance to lending institutions, and the Federal Reserve also issued informal guidance to lenders. FEMA provided guidance for the Write-Your-Own (WYO) Program, where private insurance companies are paid to write and service NFIP policies.\nIn past NFIP lapses, borrowers were not able to obtain flood insurance to close, renew, or increase loans secured by property in an SFHA until the NFIP was reauthorized. During the lapse in June 2010, estimates suggest that over 1,400 home sale closings were cancelled or delayed each day, representing over 40,000 sales per month. These figures applied to residential properties, but commercial properties were also affected by the NFIP lapse. In addition, the largest WYO insurer left the NFIP in 2011 reportedly because of the administrative burden associated with very short-term reauthorizations and lapses in authorization. Although no detailed analysis of the NFIP lapses in 2010 and 2011 has been undertaken, the economic impact could potentially have been broader than the reported effects on the domestic real estate market.", "type": "CRS Insight", "typeId": "INSIGHTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "https://www.crs.gov/Reports/IN10835", "sha1": "9bae093c8ef63b61a701aa7871200418a54f62b2", "filename": "files/20191126_IN10835_9bae093c8ef63b61a701aa7871200418a54f62b2.html", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4845, "name": "Federal Emergency Management" } ] }, { "source": "EveryCRSReport.com", "id": 606069, "date": "2019-10-08", "retrieved": "2019-10-10T22:17:58.177919", "title": "What Happens If the National Flood Insurance Program (NFIP) Lapses?", "summary": "This Insight provides a short overview of what would happen if the National Flood Insurance Program (NFIP) were not to be reauthorized by November 21, 2019, and allowed to lapse. \nExpiration of Certain NFIP Authorities\nThe National Flood Insurance Program (NFIP) is authorized by the National Flood Insurance Act of 1968 (Title XIII of P.L. 90-448, as amended, 42 U.S.C. \u00a7\u00a74001 et seq.). The NFIP does not contain a single comprehensive expiration, termination, or sunset provision for the whole of the program. Rather, the NFIP has multiple different legal provisions that tie to the expiration of key components of the program.\nSince the end of FY2017, 13 short-term NFIP reauthorizations have been enacted. The NFIP is currently authorized until November 21, 2019. Authorization of the NFIP was extended from September 30 until December 8, 2017 (P.L. 115-56), extended until December 22, 2017 (P.L. 115-90), and again until January 19, 2018 (P.L. 115-96). The NFIP lapsed between January 20 and January 22, 2018, and received a fourth short-term reauthorization until February 8, 2018 (P.L. 115-120). This legislation also authorized FEMA to honor all policy-related transactions accepted during the NFIP lapse. The NFIP lapsed again for approximately eight hours during a brief government shutdown in the early morning of February 9, 2018, and was then reauthorized until March 23, 2018 (P.L. 115-123). The NFIP received a sixth reauthorization until July 31, 2018 (P.L. 115-141), a seventh until November 30, 2018 (P.L. 115-225), an eighth until December 7, 2018 (P.L. 115-281), a ninth until December 21, 2018 (P.L. 115-298), a tenth reauthorization until May 31, 2019 (P.L. 115-396), an eleventh reauthorization until June 14, 2019 (P.L. 116-19), a twelfth reauthorization until September 30, 2019 (P.L. 116-20), and a thirteenth reauthorization until November 21, 2019 (P.L. 116-59).\nThe cancellation of $16 billion of NFIP debt (P.L. 115-72) has no effect on the impact of a lapse of NFIP authorization. Unless reauthorized or amended by Congress, the following will occur on November 21, 2019:\nThe authority to provide new flood insurance contracts will expire. Flood insurance contracts entered into before the expiration would continue until the end of their policy term of one year. \nThe authority for NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion. \nOther activities of the program would technically remain authorized, such as the issuance of Flood Mitigation Assistance Grants. However, the expiration of the key authorities listed above would have potentially significant impacts on the remaining NFIP activities. \nThe NFIP is the primary source of flood insurance coverage for residential properties in the United States. The NFIP has more than five million flood insurance policies providing over $1.3 trillion in coverage, with over 22,000 communities in 56 states and jurisdictions participating. The program collects about $4 billion in annual premium revenue and fees.\nIf there were to be a lapse in authorization on or after November 21, 2019, and the borrowing authority is reduced to $1 billion, FEMA would continue to adjust and pay claims as premium dollars come into the National Flood Insurance Fund (NFIF) and reserve fund. If the funds available to pay claims were to be depleted, claims would have to wait until sufficient premiums were received to pay them unless Congress were to appropriate supplemental funds to the NFIP to pay claims or increase the borrowing limit. \nThe Mandatory Purchase Requirement\nThe expiration of the NFIP\u2019s authority to provide new flood insurance contracts has potentially significant implications due to the mandatory purchase requirement. By law or regulation, federal agencies, federally regulated lending institutions, and government-sponsored enterprises must require certain property owners to purchase flood insurance as a condition of any mortgage that these entities make, guarantee, or purchase. Property owners, both residential and commercial, are required to purchase flood insurance if their property is identified as being in a Special Flood Hazard Area (SFHA, which is equivalent to having an estimated 1% or greater risk of flooding every year) and is in a community that participates in the NFIP. Without available flood insurance, real estate transactions in an SFHA potentially would be significantly hampered. \nIn the Biggert-Waters Flood Insurance Reform Act of 2012 (Title II of P.L. 112-141), Congress explicitly allowed federal agencies to accept private flood insurance to fulfill this mortgage requirement if the private flood insurance met the conditions defined in statute. The private flood insurance market, however, has been slow to develop and the mandatory purchase requirement is still generally met through NFIP coverage.\nPast Lapses of the NFIP\nThe NFIP was extended 17 times between 2008 and 2012, and lapsed 4 times: March 1 to March 2, 2010; March 29 to April 15, 2010; June 1 to July 2, 2010; and October 1 to October 5, 2011. In most cases when the NFIP lapsed, Congress reauthorized the NFIP retroactively. During these NFIP lapses, the FDIC issued guidance to lending institutions, and the Federal Reserve also issued informal guidance to lenders. FEMA provided guidance for the Write-Your-Own (WYO) Program, where private insurance companies are paid to write and service NFIP policies.\nIn past NFIP lapses, borrowers were not able to obtain flood insurance to close, renew, or increase loans secured by property in an SFHA until the NFIP was reauthorized. During the lapse in June 2010, estimates suggest that over 1,400 home sale closings were cancelled or delayed each day, representing over 40,000 sales per month. These figures applied to residential properties, but commercial properties were also affected by the NFIP lapse. In addition, the largest WYO insurer left the NFIP in 2011 reportedly because of the administrative burden associated with very short-term reauthorizations and lapses in authorization. Although no detailed analysis of the NFIP lapses in 2010 and 2011 has been undertaken, the economic impact could potentially have been broader than the reported effects on the domestic real estate market.", "type": "CRS Insight", "typeId": "INSIGHTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "https://www.crs.gov/Reports/IN10835", "sha1": "6fae37db2829907d611a1055d842a4abce21b7c1", "filename": "files/20191008_IN10835_6fae37db2829907d611a1055d842a4abce21b7c1.html", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4845, "name": "Federal Emergency Management" } ] }, { "source": "EveryCRSReport.com", "id": 604934, "date": "2019-09-11", "retrieved": "2019-09-16T22:06:39.229409", "title": "What Happens If the National Flood Insurance Program (NFIP) Lapses?", "summary": "This Insight provides a short overview of what would happen if the National Flood Insurance Program (NFIP) were not to be reauthorized by September 30, 2019, and allowed to lapse. \nExpiration of Certain NFIP Authorities\nThe National Flood Insurance Program (NFIP) is authorized by the National Flood Insurance Act of 1968 (Title XIII of P.L. 90-448, as amended, 42 U.S.C. \u00a7\u00a74001 et seq.). The NFIP does not contain a single comprehensive expiration, termination, or sunset provision for the whole of the program. Rather, the NFIP has multiple different legal provisions that tie to the expiration of key components of the program.\nSince the end of FY2017, 12 short-term NFIP reauthorizations have been enacted. The NFIP is currently authorized until September 30, 2019. Authorization of the NFIP was extended from September 30 until December 8, 2017 (P.L. 115-56), extended until December 22, 2017 (P.L. 115-90), and again until January 19, 2018 (P.L. 115-96). The NFIP lapsed between January 20 and January 22, 2018, and received a fourth short-term reauthorization until February 8, 2018 (P.L. 115-120). This legislation also authorized FEMA to honor all policy-related transactions accepted during the NFIP lapse. The NFIP lapsed again for approximately eight hours during a brief government shutdown in the early morning of February 9, 2018, and was then reauthorized until March 23, 2018 (P.L. 115-123). The NFIP received a sixth reauthorization until July 31, 2018 (P.L. 115-141), a seventh until November 30, 2018 (P.L. 115-225), an eighth until December 7, 2018 (P.L. 115-281), a ninth until December 21, 2018 (P.L. 115-298), a tenth reauthorization until May 31, 2019 (P.L. 115-396), an eleventh reauthorization until June 14, 2019 (P.L. 116-19), and a twelfth reauthorization until September 30, 2019 (P.L. 116-20).\nThe cancellation of $16 billion of NFIP debt (P.L. 115-72) has no effect on the impact of a lapse of NFIP authorization. Unless reauthorized or amended by Congress, the following will occur on September 30, 2019:\nThe authority to provide new flood insurance contracts will expire. Flood insurance contracts entered into before the expiration would continue until the end of their policy term of one year. \nThe authority for NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion. \nOther activities of the program would technically remain authorized, such as the issuance of Flood Mitigation Assistance Grants. However, the expiration of the key authorities listed above would have potentially significant impacts on the remaining NFIP activities. \nThe NFIP is the primary source of flood insurance coverage for residential properties in the United States. The NFIP has nearly 5.1 million flood insurance policies providing over $1.3 trillion in coverage, with over 22,000 communities in 56 states and jurisdictions participating. The program collects about $3.6 billion in annual premium revenue.\nIf there were to be a lapse in authorization on or after September 30, 2019, and the borrowing authority is reduced to $1 billion, FEMA would continue to adjust and pay claims as premium dollars come into the National Flood Insurance Fund (NFIF) and reserve fund. If the funds available to pay claims were to be depleted, claims would have to wait until sufficient premiums were received to pay them unless Congress were to appropriate supplemental funds to the NFIP to pay claims or increase the borrowing limit. \nThe Mandatory Purchase Requirement\nThe expiration of the NFIP\u2019s authority to provide new flood insurance contracts has potentially significant implications due to the mandatory purchase requirement. By law or regulation, federal agencies, federally regulated lending institutions, and government-sponsored enterprises must require certain property owners to purchase flood insurance as a condition of any mortgage that these entities make, guarantee, or purchase. Property owners, both residential and commercial, are required to purchase flood insurance if their property is identified as being in a Special Flood Hazard Area (SFHA, which is equivalent to having an estimated 1% or greater risk of flooding every year) and is in a community that participates in the NFIP. Without available flood insurance, real estate transactions in an SFHA potentially would be significantly hampered. \nIn the Biggert-Waters Flood Insurance Reform Act of 2012 (Title II of P.L. 112-141), Congress explicitly allowed federal agencies to accept private flood insurance to fulfill this mortgage requirement if the private flood insurance met the conditions defined in statute. The private flood insurance market, however, has been slow to develop and the mandatory purchase requirement is still generally met through NFIP coverage.\nPast Lapses of the NFIP\nThe NFIP was extended 17 times between 2008 and 2012, and lapsed 4 times: March 1 to March 2, 2010; March 29 to April 15, 2010; June 1 to July 2, 2010; and October 1 to October 5, 2011. In most cases when the NFIP lapsed, Congress reauthorized the NFIP retroactively. During these NFIP lapses, the FDIC issued guidance to lending institutions, and the Federal Reserve also issued informal guidance to lenders. FEMA provided guidance for the Write-Your-Own (WYO) Program, where private insurance companies are paid to write and service NFIP policies.\nIn past NFIP lapses, borrowers were not able to obtain flood insurance to close, renew, or increase loans secured by property in an SFHA until the NFIP was reauthorized. During the lapse in June 2010, estimates suggest that over 1,400 home sale closings were cancelled or delayed each day, representing over 40,000 sales per month. These figures applied to residential properties, but commercial properties were also affected by the NFIP lapse. In addition, the largest WYO insurer left the NFIP in 2011 reportedly because of the administrative burden associated with very short-term reauthorizations and lapses in authorization. Although no detailed analysis of the NFIP lapses in 2010 and 2011 has been undertaken, the economic impact could potentially have been broader than the reported effects on the domestic real estate market.", "type": "CRS Insight", "typeId": "INSIGHTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "https://www.crs.gov/Reports/IN10835", "sha1": "683ac5b6370af424884f9b72035c8009765a7931", "filename": "files/20190911_IN10835_683ac5b6370af424884f9b72035c8009765a7931.html", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4845, "name": "Federal Emergency Management" } ] }, { "source": "EveryCRSReport.com", "id": 603144, "date": "2019-08-01", "retrieved": "2019-08-12T22:11:51.197536", "title": "What Happens If the National Flood Insurance Program (NFIP) Lapses?", "summary": "This Insight provides a short overview of what would happen if the National Flood Insurance Program (NFIP) were not to be reauthorized by May 31, 2019, and allowed to lapse. See CRS Report R45099, National Flood Insurance Program: Selected Issues and Legislation in the 115th Congress for the current status of NFIP reauthorization legislation. \nExpiration of Certain NFIP Authorities\nThe National Flood Insurance Program (NFIP) is authorized by the National Flood Insurance Act of 1968 (Title XIII of P.L. 90-448, as amended, 42 U.S.C. \u00a7\u00a74001 et seq.). The NFIP does not contain a single comprehensive expiration, termination, or sunset provision for the whole of the program. Rather, the NFIP has multiple different legal provisions that tie to the expiration of key components of the program.\nSince the end of FY2017, 12 short-term NFIP reauthorizations have been enacted. The NFIP is currently authorized until September 30, 2019. Authorization of the NFIP was extended from September 30 until December 8, 2017 (P.L. 115-56), extended until December 22, 2017 (P.L. 115-90), and again until January 19, 2018 (P.L. 115-96). The NFIP lapsed between January 20 and January 22, 2018, and received a fourth short-term reauthorization until February 8, 2018 (P.L. 115-120). This legislation also authorized FEMA to honor all policy-related transactions accepted during the NFIP lapse. The NFIP lapsed again for approximately eight hours during a brief government shutdown in the early morning of February 9, 2018, and was then reauthorized until March 23, 2018 (P.L. 115-123). The NFIP received a sixth reauthorization until July 31, 2018 (P.L. 115-141), a seventh until November 30, 2018 (P.L. 115-225), an eighth until December 7, 2018 (P.L. 115-281), a ninth until December 21, 2018 (P.L. 115-298), a tenth until May 31, 2019 (P.L. 115-396), an eleventh until June 14, 2019 (P.L. 116-19), and a twelfth reauthorization until September 30, 2019 (P.L. 116-20).\nThe cancellation of $16 billion of NFIP debt (P.L. 115-72) has no effect on the impact of a lapse of NFIP authorization. Unless reauthorized or amended by Congress, the following will occur on September 30, 2019:\nThe authority to provide new flood insurance contracts will expire. Flood insurance contracts entered into before the expiration would continue until the end of their policy term of one year. \nThe authority for NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion. \nOther activities of the program would technically remain authorized, such as the issuance of Flood Mitigation Assistance Grants. However, the expiration of the key authorities listed above would have potentially significant impacts on the remaining NFIP activities. \nThe NFIP is the primary source of flood insurance coverage for residential properties in the United States. The NFIP has nearly 5.1 million flood insurance policies providing over $1.3 trillion in coverage, with over 22,000 communities in 56 states and jurisdictions participating. The program collects about $3.6 billion in annual premium revenue.\nIf there were to be a lapse in authorization on or after September 30, 2019, and the borrowing authority is reduced to $1 billion, FEMA would continue to adjust and pay claims as premium dollars come into the National Flood Insurance Fund (NFIF) and reserve fund. If the funds available to pay claims were to be depleted, claims would have to wait until sufficient premiums were received to pay them unless Congress were to appropriate supplemental funds to the NFIP to pay claims or increase the borrowing limit. \nThe Mandatory Purchase Requirement\nThe expiration of the NFIP\u2019s authority to provide new flood insurance contracts has potentially significant implications due to the mandatory purchase requirement. By law or regulation, federal agencies, federally regulated lending institutions, and government-sponsored enterprises must require certain property owners to purchase flood insurance as a condition of any mortgage that these entities make, guarantee, or purchase. Property owners, both residential and commercial, are required to purchase flood insurance if their property is identified as being in a Special Flood Hazard Area (SFHA, which is equivalent to having an estimated 1% or greater risk of flooding every year) and is in a community that participates in the NFIP. Without available flood insurance, real estate transactions in an SFHA potentially would be significantly hampered. \nIn the Biggert-Waters Flood Insurance Reform Act of 2012 (Title II of P.L. 112-141), Congress explicitly allowed federal agencies to accept private flood insurance to fulfill this mortgage requirement if the private flood insurance met the conditions defined in statute. The private flood insurance market, however, has been slow to develop and the mandatory purchase requirement is still generally met through NFIP coverage.\nPast Lapses of the NFIP\nThe NFIP was extended 17 times between 2008 and 2012, and lapsed four times: March 1 to March 2, 2010; March 29 to April 15, 2010; June 1 to July 2, 2010; and October 1 to October 5, 2011. In most cases when the NFIP lapsed, Congress reauthorized the NFIP retroactively. During these NFIP lapses, the FDIC issued guidance to lending institutions, and the Federal Reserve also issued informal guidance to lenders. FEMA provided guidance for the Write-Your-Own (WYO) Program, where private insurance companies are paid to write and service NFIP policies.\nIn past NFIP lapses, borrowers were not able to obtain flood insurance to close, renew, or increase loans secured by property in an SFHA until the NFIP was reauthorized. During the lapse in June 2010, estimates suggest that over 1,400 home sale closings were cancelled or delayed each day, representing over 40,000 sales per month. These figures applied to residential properties, but commercial properties were also affected by the NFIP lapse. In addition, the largest WYO insurer left the NFIP in 2011 reportedly because of the administrative burden associated with very short-term reauthorizations and lapses in authorization. Although no detailed analysis of the NFIP lapses in 2010 and 2011 has been undertaken, the economic impact could potentially have been broader than the reported effects on the domestic real estate market.", "type": "CRS Insight", "typeId": "INSIGHTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "https://www.crs.gov/Reports/IN10835", "sha1": "573b2053b21ce927d57fec13a2c8ff1c5b109dfa", "filename": "files/20190801_IN10835_573b2053b21ce927d57fec13a2c8ff1c5b109dfa.html", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4845, "name": "Federal Emergency Management" } ] }, { "source": "EveryCRSReport.com", "id": 594246, "date": "2019-01-14", "retrieved": "2019-04-17T14:34:58.703779", "title": "What Happens If the National Flood Insurance Program (NFIP) Lapses?", "summary": "This Insight provides a short overview of what would happen if the National Flood Insurance Program (NFIP) were not to be reauthorized by May 31, 2019, and allowed to lapse. See CRS Report R45099, National Flood Insurance Program: Selected Issues and Legislation in the 115th Congress for the current status of NFIP reauthorization legislation. \nExpiration of Certain NFIP Authorities\nThe National Flood Insurance Program (NFIP) is authorized by the National Flood Insurance Act of 1968 (Title XIII of P.L. 90-448, as amended, 42 U.S.C. \u00a7\u00a74001 et seq.). The NFIP does not contain a single comprehensive expiration, termination, or sunset provision for the whole of the program. Rather, the NFIP has multiple different legal provisions that tie to the expiration of key components of the program.\nAuthorization of the NFIP was extended from September 30 until December 8, 2017 (P.L. 115-56), extended until December 22, 2017 (P.L. 115-90), and again until January 19, 2018 (P.L. 115-96). The NFIP lapsed between January 20 and January 22, 2018, and received a fourth short-term reauthorization until February 8, 2018 (P.L. 115-120). This legislation also authorized FEMA to honor all policy-related transactions accepted during the NFIP lapse. The NFIP lapsed again for approximately eight hours during a brief government shutdown in the early morning of February 9, 2018, and was then reauthorized until March 23, 2018 (P.L. 115-123). The NFIP received a sixth reauthorization until July 31, 2018 (P.L. 115-141), a seventh until November 30, 2018 (P.L. 115-225), an eighth until December 7, 2018 (P.L. 115-281), a ninth until December 21, 2018 (P.L. 115-298), and a tenth reauthorization until May 31, 2019 (P.L. 115-396).\nThe cancellation of $16 billion of NFIP debt (P.L. 115-72) has no effect on the impact of a lapse of NFIP authorization. The 21st Century Flood Reform Act (H.R. 2874), passed by the House in November 2017, would reauthorize the NFIP until September 30, 2022. Three bills have been introduced in the Senate to extend the NFIP authorization (S. 1313, S. 1368, and S. 1571) but the Senate Banking Committee has yet to take any formal action. \nUnless reauthorized or amended by Congress, the following will occur on May 31, 2019:\nThe authority to provide new flood insurance contracts will expire. Flood insurance contracts entered into before the expiration would continue until the end of their policy term of one year. \nThe authority for NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion. \nOther activities of the program would technically remain authorized, such as the issuance of Flood Mitigation Assistance Grants. However, the expiration of the key authorities listed above would have potentially significant impacts on the remaining NFIP activities. \nThe NFIP is the primary source of flood insurance coverage for residential properties in the United States. The NFIP has over 5.1 million flood insurance policies providing over $1.3 trillion in coverage, with approximately 23,000 communities in 56 states and jurisdictions participating. The program collects about $3.6 billion in annual premium revenue.\nIf there were to be a lapse in authorization on or after May 31, 2019, and the borrowing authority is reduced to $1 billion, FEMA would continue to adjust and pay claims as premium dollars come into the National Flood Insurance Fund (NFIF) and reserve fund. If the funds available to pay claims were to be depleted, claims would have to wait until sufficient premiums were received to pay them unless Congress were to appropriate supplemental funds to the NFIP to pay claims or increase the borrowing limit. \nThe Mandatory Purchase Requirement\nThe expiration of the NFIP\u2019s authority to provide new flood insurance contracts has potentially significant implications due to the mandatory purchase requirement. By law or regulation, federal agencies, federally regulated lending institutions, and government-sponsored enterprises must require certain property owners to purchase flood insurance as a condition of any mortgage that these entities make, guarantee, or purchase. Property owners, both residential and commercial, are required to purchase flood insurance if their property is identified as being in a Special Flood Hazard Area (SFHA, which is equivalent to having an estimated 1% or greater risk of flooding every year) and is in a community that participates in the NFIP. Without available flood insurance, real estate transactions in an SFHA potentially would be significantly hampered. \nIn the Biggert-Waters Flood Insurance Reform Act of 2012 (Title II of P.L. 112-141), Congress explicitly allowed federal agencies to accept private flood insurance to fulfill this mortgage requirement if the private flood insurance met the conditions defined in statute. The private flood insurance market, however, has been slow to develop and the mandatory purchase requirement is still generally met through NFIP coverage.\nPast Lapses of the NFIP\nThe NFIP was extended 17 times between 2008 and 2012, and lapsed four times: March 1 to March 2, 2010; March 29 to April 15, 2010; June 1 to July 2, 2010; and October 1 to October 5, 2011. In most cases when the NFIP lapsed, Congress reauthorized the NFIP retroactively. During these NFIP lapses, the FDIC issued guidance to lending institutions, and the Federal Reserve also issued informal guidance to lenders. FEMA provided guidance for the Write-Your-Own (WYO) Program, where private insurance companies are paid to write and service NFIP policies.\nIn past NFIP lapses, borrowers were not able to obtain flood insurance to close, renew, or increase loans secured by property in an SFHA until the NFIP was reauthorized. During the lapse in June 2010, estimates suggest that over 1,400 home sale closings were cancelled or delayed each day, representing over 40,000 sales per month. These figures applied to residential properties, but commercial properties were also affected by the NFIP lapse. In addition, the largest WYO insurer left the NFIP in 2011 reportedly because of the administrative burden associated with very short-term reauthorizations and lapses in authorization. Although no detailed analysis of the NFIP lapses in 2010 and 2011 has been undertaken, the economic impact could potentially have been broader than the reported effects on the domestic real estate market.", "type": "CRS Insight", "typeId": "INSIGHTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "https://www.crs.gov/Reports/IN10835", "sha1": "d1ed83c17e62b6873befff126c3bf7a091ab4d31", "filename": "files/20190114_IN10835_d1ed83c17e62b6873befff126c3bf7a091ab4d31.html", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4845, "name": "Federal Emergency Management" } ] }, { "source": "EveryCRSReport.com", "id": 589481, "date": "2019-01-04", "retrieved": "2019-01-08T18:09:26.493578", "title": "What Happens If the National Flood Insurance Program (NFIP) Lapses?", "summary": "This Insight provides a short overview of what would happen if the NFIP were not to be reauthorized by May 31, 2019, and allowed to lapse. See CRS Report R45099, National Flood Insurance Program: Selected Issues and Legislation in the 115th Congress for the current status of NFIP reauthorization legislation. \nExpiration of Certain NFIP Authorities\nThe National Flood Insurance Program (NFIP) is authorized by the National Flood Insurance Act of 1968 (Title XIII of P.L. 90-448, as amended, 42 U.S.C. \u00a7\u00a74001 et seq.). The NFIP does not contain a single comprehensive expiration, termination, or sunset provision for the whole of the program. Rather, the NFIP has multiple different legal provisions that tie to the expiration of key components of the program.\nAuthorization of the NFIP was extended from September 30 until December 8, 2017 (P.L. 115-56), extended until December 22, 2017 (P.L. 115-90), and again until January 19, 2018 (P.L. 115-96). The NFIP lapsed between January 20 and January 22, 2018, and received a fourth short-term reauthorization until February 8, 2018 (P.L. 115-120). This legislation also authorized FEMA to honor all policy-related transactions accepted during the NFIP lapse. The NFIP lapsed again for approximately eight hours during a brief government shutdown in the early morning of February 9, 2018, and was then reauthorized until March 23, 2018 (P.L. 115-123). The NFIP received a 6th reauthorization until July 31, 2018 (P.L. 115-141), a 7th until November 30, 2018 (P.L. 115-225), an 8th until December 7, 2018 (P.L. 115-281), a 9th until December 21, 2018 (P.L. 115-298), and a 10th reauthorization until May 30, 2019 (S. 3628).\nThe cancellation of $16 billion of NFIP debt (P.L. 115-72) has no effect on the impact of a lapse of NFIP authorization. The 21st Century Flood Reform Act (H.R. 2874), passed by the House in November 2017, would reauthorize the NFIP until September 30, 2022. Three bills have been introduced in the Senate to extend the NFIP authorization (S. 1313, S. 1368, and S. 1571) but the Senate Banking Committee has yet to take any formal action. \nUnless reauthorized or amended by Congress, the following will occur on December 21, 2018:\nThe authority to provide new flood insurance contracts will expire. Flood insurance contracts entered into before the expiration would continue until the end of their policy term of one year. \nThe authority for NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion. \nOther activities of the program would technically remain authorized, such as the issuance of Flood Mitigation Assistance Grants. However, the expiration of the key authorities listed above would have potentially significant impacts on the remaining NFIP activities. \nThe NFIP is the primary source of flood insurance coverage for residential properties in the United States. The NFIP has over 5.1 million flood insurance policies providing over $1.3 trillion in coverage, with approximately 23,000 communities in 56 states and jurisdictions participating. The program collects about $3.6 billion in annual premium revenue.\nIf there were to be a lapse in authorization on or after December 21, 2018, and the borrowing authority is reduced to $1 billion, FEMA would continue to adjust and pay claims as premium dollars come into the National Flood Insurance Fund (NFIF) and reserve fund. If the funds available to pay claims were to be depleted, claims would have to wait until sufficient premiums were received to pay them unless Congress were to appropriate supplemental funds to the NFIP to pay claims or increase the borrowing limit. \nThe Mandatory Purchase Requirement\nThe expiration of the NFIP\u2019s authority to provide new flood insurance contracts has potentially significant implications due to the mandatory purchase requirement. By law or regulation, federal agencies, federally regulated lending institutions, and government-sponsored enterprises must require certain property owners to purchase flood insurance as a condition of any mortgage that these entities make, guarantee, or purchase. Property owners, both residential and commercial, are required to purchase flood insurance if their property is identified as being in a Special Flood Hazard Area (SFHA, which is equivalent to having an estimated 1% or greater risk of flooding every year) and is in a community that participates in the NFIP. Without available flood insurance, real estate transactions in an SFHA potentially would be significantly hampered. \nIn the Biggert-Waters Flood Insurance Reform Act of 2012 (Title II of P.L. 112-141), Congress explicitly allowed federal agencies to accept private flood insurance to fulfill this mortgage requirement if the private flood insurance met the conditions defined in statute. The private flood insurance market, however, has been slow to develop and the mandatory purchase requirement is still generally met through NFIP coverage.\nPast Lapses of the NFIP\nThe NFIP was extended 17 times between 2008 and 2012, and lapsed four times: March 1 to March 2, 2010; March 29 to April 15, 2010; June 1 to July 2, 2010; and October 1 to October 5, 2011. In most cases when the NFIP lapsed, Congress reauthorized the NFIP retroactively. During these NFIP lapses, the FDIC issued guidance to lending institutions, and the Federal Reserve also issued informal guidance to lenders. FEMA provided guidance for the Write-Your-Own (WYO) Program, where private insurance companies are paid to write and service NFIP policies.\nIn past NFIP lapses, borrowers were not able to obtain flood insurance to close, renew, or increase loans secured by property in an SFHA until the NFIP was reauthorized. During the lapse in June 2010, estimates suggest that over 1,400 home sale closings were cancelled or delayed each day, representing over 40,000 sales per month. These figures applied to residential properties, but commercial properties were also affected by the NFIP lapse. In addition, the largest WYO insurer left the NFIP in 2011 reportedly because of the administrative burden associated with very short-term reauthorizations and lapses in authorization. Although no detailed analysis of the NFIP lapses in 2010 and 2011 has been undertaken, the economic impact could potentially have been broader than the reported effects on the domestic real estate market.", "type": "CRS Insight", "typeId": "INSIGHTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/IN10835", "sha1": "6139311614f8d2ad40dec4f1266a65029f217f45", "filename": "files/20190104_IN10835_6139311614f8d2ad40dec4f1266a65029f217f45.html", "images": {} }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/IN10835", "sha1": "d0c526b79051ce1f6e0874c0ba6d6df09948228f", "filename": "files/20190104_IN10835_d0c526b79051ce1f6e0874c0ba6d6df09948228f.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4845, "name": "Federal Emergency Management" } ] }, { "source": "EveryCRSReport.com", "id": 588860, "date": "2018-12-12", "retrieved": "2018-12-19T14:02:39.754877", "title": "What Happens If the National Flood Insurance Program (NFIP) Lapses?", "summary": "This Insight provides a short overview of what would happen if the NFIP were not to be reauthorized by December 21, 2018, and allowed to lapse. See CRS Report R45099, National Flood Insurance Program: Selected Issues and Legislation in the 115th Congress for the current status of NFIP reauthorization legislation. \nExpiration of Certain NFIP Authorities\nThe National Flood Insurance Program (NFIP) is authorized by the National Flood Insurance Act of 1968 (Title XIII of P.L. 90-448, as amended, 42 U.S.C. \u00a7\u00a74001 et seq.). The NFIP does not contain a single comprehensive expiration, termination, or sunset provision for the whole of the program. Rather, the NFIP has multiple different legal provisions that tie to the expiration of key components of the program.\nAuthorization of the NFIP was extended from September 30 until December 8, 2017 (Section 130 of P.L. 115-56), extended until December 22, 2017 (P.L. 115-90), and again until January 19, 2018 (P.L. 115-96). The NFIP lapsed between January 20 and January 22, 2018, and received a fourth short-term reauthorization until February 8, 2018 (P.L. 115-120). This legislation also authorized FEMA to honor all policy-related transactions accepted during the NFIP lapse. The NFIP lapsed again for approximately eight hours during a brief government shut-down in the early morning of February 9, 2018, and was then reauthorized until March 23, 2018 (P.L. 115-123). The NFIP received a sixth reauthorization until July 31, 2018 (P.L. 115-141), a seventh reauthorization until November 30, 2018 (P.L. 115-225), an eighth reauthorization until December 7, 2018 (P.L. 115-281), and a ninth reauthorization until December 21, 2018 (P.L. 115-298).\nThe cancellation of $16 billion of NFIP debt (P.L. 115-72) has no effect on the impact of a lapse of NFIP authorization. The 21st Century Flood Reform Act (H.R. 2874), passed by the House in November 2017, would reauthorize the NFIP until September 30, 2022. Three bills have been introduced in the Senate to extend the NFIP authorization (S. 1313, S. 1368, and S. 1571) but the Senate Banking Committee has yet to take any formal action. \nUnless reauthorized or amended by Congress, the following will occur on December 21, 2018:\nThe authority to provide new flood insurance contracts will expire. Flood insurance contracts entered into before the expiration would continue until the end of their policy term of one year. \nThe authority for NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion. \nOther activities of the program would technically remain authorized, such as the issuance of Flood Mitigation Assistance Grants. However, the expiration of the key authorities listed above would have potentially significant impacts on the remaining NFIP activities. \nThe NFIP is the primary source of flood insurance coverage for residential properties in the United States. The NFIP has over 5.1 million flood insurance policies providing over $1.3 trillion in coverage, with approximately 23,000 communities in 56 states and jurisdictions participating. The program collects about $3.6 billion in annual premium revenue.\nIf there were to be a lapse in authorization on or after December 21, 2018, and the borrowing authority is reduced to $1 billion, FEMA would continue to adjust and pay claims as premium dollars come into the National Flood Insurance Fund (NFIF) and reserve fund. If the funds available to pay claims were to be depleted, claims would have to wait until sufficient premiums were received to pay them unless Congress were to appropriate supplemental funds to the NFIP to pay claims or increase the borrowing limit. \nThe Mandatory Purchase Requirement\nThe expiration of the NFIP\u2019s authority to provide new flood insurance contracts has potentially significant implications due to the mandatory purchase requirement. By law or regulation, federal agencies, federally regulated lending institutions, and government-sponsored enterprises must require certain property owners to purchase flood insurance as a condition of any mortgage that these entities make, guarantee, or purchase. Property owners, both residential and commercial, are required to purchase flood insurance if their property is identified as being in a Special Flood Hazard Area (SFHA, which is equivalent to having an estimated 1% or greater risk of flooding every year) and is in a community that participates in the NFIP. Without available flood insurance, real estate transactions in an SFHA potentially would be significantly hampered. \nIn the Biggert-Waters Flood Insurance Reform Act of 2012 (Title II of P.L. 112-141), Congress explicitly allowed federal agencies to accept private flood insurance to fulfill this mortgage requirement if the private flood insurance met the conditions defined in statute. The private flood insurance market, however, has been slow to develop and the mandatory purchase requirement is still generally met through NFIP coverage.\nPast Lapses of the NFIP\nThe NFIP was extended 17 times between 2008 and 2012, and lapsed four times: March 1 to March 2, 2010; March 29 to April 15, 2010; June 1 to July 2, 2010; and October 1 to October 5, 2011. In most cases when the NFIP lapsed, Congress reauthorized the NFIP retroactively. During these NFIP lapses, the FDIC issued guidance to lending institutions, and the Federal Reserve also issued informal guidance to lenders. FEMA provided guidance for the Write-Your-Own (WYO) Program, where private insurance companies are paid to write and service NFIP policies.\nIn past NFIP lapses, borrowers were not able to obtain flood insurance to close, renew, or increase loans secured by property in a SFHA until the NFIP was reauthorized. During the lapse in June 2010, estimates suggest that over 1,400 home sale closings were cancelled or delayed each day, representing over 40,000 sales per month. These figures applied to residential properties, but commercial properties were also affected by the NFIP lapse. In addition, the largest WYO insurer left the NFIP in 2011 reportedly because of the administrative burden associated with very short-term reauthorizations and lapses in authorization. Although no detailed analysis of the NFIP lapses in 2010 and 2011 has been undertaken, the economic impact could potentially have been broader than the reported effects on the domestic real estate market.", "type": "CRS Insight", "typeId": "INSIGHTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/IN10835", "sha1": "e6d2ec48cb6fd6ec28f1ae6e34f094081f391d03", "filename": "files/20181212_IN10835_e6d2ec48cb6fd6ec28f1ae6e34f094081f391d03.html", "images": {} }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/IN10835", "sha1": "c8cc7846d46b7336ac2497cb218dbefd859c5447", "filename": "files/20181212_IN10835_c8cc7846d46b7336ac2497cb218dbefd859c5447.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4845, "name": "Federal Emergency Management" } ] }, { "source": "EveryCRSReport.com", "id": 583460, "date": "2018-07-31", "retrieved": "2018-10-05T23:01:28.349531", "title": "What Happens If the National Flood Insurance Program (NFIP) Lapses?", "summary": "This Insight provides a short overview of what would happen if the NFIP were not to be reauthorized by November 30, 2018, and allowed to lapse. See CRS Report R45099, National Flood Insurance Program: Selected Issues and Legislation in the 115th Congress for the current status of NFIP reauthorization legislation. \nExpiration of Certain NFIP Authorities\nThe National Flood Insurance Program (NFIP) is authorized by the National Flood Insurance Act of 1968 (Title XIII of P.L. 90-448, as amended, 42 U.S.C. \u00a7\u00a74001 et seq.). The NFIP does not contain a single comprehensive expiration, termination, or sunset provision for the whole of the program. Rather, the NFIP has multiple different legal provisions that tie to the expiration of key components of the program.\nAuthorization of the NFIP was extended from September 30 until December 8, 2017 (Section 130 of P.L. 115-56), extended until December 22, 2017 (P.L. 115-90), and again until January 19, 2018 (P.L. 115-96). The NFIP lapsed between January 20 and January 22, 2018, and received a fourth short-term reauthorization until February 8, 2018 (P.L. 115-120). This legislation also authorized FEMA to honor all policy-related transactions accepted during the NFIP lapse. The NFIP lapsed again for approximately eight hours during a brief government shut-down in the early morning of February 9, 2018, and was then reauthorized until March 23, 2018 (P.L. 115-123). The NFIP received a sixth reauthorization until July 31, 2018 (P.L. 115-141), and a seventh reauthorization until November 30, 2018 (P.L. 115-225).\nThe cancellation of $16 billion of NFIP debt (P.L. 115-72) has no effect on the impact of a lapse of NFIP authorization. The 21st Century Flood Reform Act (H.R. 2874), passed by the House in November 2017, would reauthorize the NFIP until September 30, 2022. Three bills have been introduced in the Senate to extend the NFIP authorization (S. 1313, S. 1368, and S. 1571) but the Senate Banking Committee has yet to take any formal action. \nUnless reauthorized or amended by Congress, the following will occur on November 30, 2018:\nThe authority to provide new flood insurance contracts will expire. Flood insurance contracts entered into before the expiration would continue until the end of their policy term of one year. \nThe authority for NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion. \nOther activities of the program would technically remain authorized, such as the issuance of Flood Mitigation Assistance Grants. However, the expiration of the key authorities listed above would have potentially significant impacts on the remaining NFIP activities. \nThe NFIP is the primary source of flood insurance coverage for residential properties in the United States. As of May 2018, the NFIP had over 5 million flood insurance policies providing over $1.28 trillion in coverage, with approximately 23,000 communities in 56 states and jurisdictions participating. The program collects about $3.6 billion in annual premium revenue.\nIf there were to be a lapse in authorization on or after November 30, 2018, and the borrowing authority is reduced to $1 billion, FEMA would continue to adjust and pay claims as premium dollars come into the National Flood Insurance Fund (NFIF) and reserve fund. If the funds available to pay claims were to be depleted, claims would have to wait until sufficient premiums were received to pay them unless Congress were to appropriate supplemental funds to the NFIP to pay claims or increase the borrowing limit. \nThe Mandatory Purchase Requirement\nThe expiration of the NFIP\u2019s authority to provide new flood insurance contracts has potentially significant implications due to the mandatory purchase requirement. By law or regulation, federal agencies, federally regulated lending institutions, and government-sponsored enterprises must require certain property owners to purchase flood insurance as a condition of any mortgage that these entities make, guarantee, or purchase. Property owners, both residential and commercial, are required to purchase flood insurance if their property is identified as being in a Special Flood Hazard Area (SFHA, which is equivalent to having an estimated 1% or greater risk of flooding every year) and is in a community that participates in the NFIP. Without available flood insurance, real estate transactions in an SFHA potentially would be significantly hampered. \nIn the Biggert-Waters Flood Insurance Reform Act of 2012 (Title II of P.L. 112-141), Congress explicitly allowed federal agencies to accept private flood insurance to fulfill this mortgage requirement if the private flood insurance met the conditions defined in statute. The private flood insurance market, however, has been slow to develop and the mandatory purchase requirement is still generally met through NFIP coverage.\nPast Lapses of the NFIP\nThe NFIP was extended 17 times between 2008 and 2012, and lapsed four times: March 1 to March 2, 2010; March 29 to April 15, 2010; June 1 to July 2, 2010; and October 1 to October 5, 2011. In most cases when the NFIP lapsed, Congress reauthorized the NFIP retroactively. During these NFIP lapses, the FDIC issued guidance to lending institutions, and the Federal Reserve also issued informal guidance to lenders. FEMA provided guidance for the Write-Your-Own (WYO) Program, where private insurance companies are paid to write and service NFIP policies.\nIn past NFIP lapses, borrowers were not able to obtain flood insurance to close, renew, or increase loans secured by property in a SFHA until the NFIP was reauthorized. During the lapse in June 2010, estimates suggest that over 1,400 home sale closings were cancelled or delayed each day, representing over 40,000 sales per month. These figures applied to residential properties, but commercial properties were also affected by the NFIP lapse. In addition, the largest WYO insurer left the NFIP in 2011 reportedly because of the administrative burden associated with very short-term reauthorizations and lapses in authorization. Although no detailed analysis of the NFIP lapses in 2010 and 2011 has been undertaken, the economic impact could potentially have been broader than the reported effects on the domestic real estate market.", "type": "CRS Insight", "typeId": "INSIGHTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/IN10835", "sha1": "76977f34ca95b6900310b513eab2f3b88ca67205", "filename": "files/20180731_IN10835_76977f34ca95b6900310b513eab2f3b88ca67205.html", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4845, "name": "Federal Emergency Management" } ] }, { "source": "EveryCRSReport.com", "id": 580179, "date": "2018-04-16", "retrieved": "2018-05-10T10:39:40.540747", "title": "What Happens If the National Flood Insurance Program (NFIP) Lapses?", "summary": "This Insight provides a short overview of what would happen if the NFIP were not to be reauthorized by July 31, 2018, and allowed to lapse. See CRS Report R45099, National Flood Insurance Program: Selected Issues and Legislation in the 115th Congress for the current status of NFIP reauthorization legislation. \nExpiration of Certain NFIP Authorities\nThe National Flood Insurance Program (NFIP) is authorized by the National Flood Insurance Act of 1968 (Title XIII of P.L. 90-448, as amended, 42 U.S.C. \u00a74001 et seq.). The NFIP does not contain a single comprehensive expiration, termination, or sunset provision for the whole of the program. Rather, the NFIP has multiple different legal provisions that tie to the expiration of key components of the program.\nAuthorization of the NFIP was extended from September 30 until December 8, 2017 (Section 130 of P.L. 115-56), extended until December 22, 2017 (P.L. 115-90), and again until January 19, 2018 (P.L. 115-96). The NFIP lapsed between January 20 and January 22, 2018, and received a fourth short-term reauthorization until February 8, 2018 (P.L. 115-120). This legislation also authorized FEMA to honor all policy-related transactions accepted during the NFIP lapse. The NFIP lapsed again for approximately eight hours during a brief government shut-down in the early morning of February 9, 2018, and was then reauthorized until March 23, 2018 (P.L. 115-123). The NFIP received a sixth reauthorization until July 31, 2018 (P.L.115-141).\nThe cancellation of $16 billion of NFIP debt (P.L. 115-72) has no effect on the impact of a lapse of NFIP authorization. The 21st Century Flood Reform Act (H.R. 2874), passed by the House in November 2017, would reauthorize the NFIP until September 30, 2022. Three bills have been introduced in the Senate to extend the NFIP authorization (S. 1313, S. 1368, and S. 1571), but the Senate Banking Committee has yet to take any formal action. \nUnless reauthorized or amended by Congress, the following will occur on July 31, 2018:\nThe authority to provide new flood insurance contracts will expire. Flood insurance contracts entered into before the expiration would continue until the end of their policy term of one year. \nThe authority for NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion. \nOther activities of the program would technically remain authorized, such as the issuance of Flood Mitigation Assistance Grants. However, the expiration of the key authorities listed above would have potentially significant impacts on the remaining NFIP activities. \nThe NFIP is the primary source of flood insurance coverage for residential properties in the United States. As of January 2018, the NFIP had over 5 million flood insurance policies providing nearly $1.28 trillion in coverage, with approximately 23,000 communities in 56 states and jurisdictions participating. The program collects about $3.6 billion in annual premium revenue.\nIf there were to be a lapse in authorization on or after July 31, 2018, and the borrowing authority is reduced to $1 billion, FEMA would continue to adjust and pay claims as premium dollars come into the National Flood Insurance Fund (NFIF) and reserve fund. If the funds available to pay claims were to be depleted, claims would have to wait until sufficient premiums were received to pay them unless Congress were to appropriate supplemental funds to the NFIP to pay claims or increase the borrowing limit. \nThe Mandatory Purchase Requirement\nThe expiration of the NFIP\u2019s authority to provide new flood insurance contracts has potentially significant implications due to the mandatory purchase requirement. By law or regulation, federal agencies, federally regulated lending institutions, and government-sponsored enterprises must require certain property owners to purchase flood insurance as a condition of any mortgage that these entities make, guarantee, or purchase. Property owners, both residential and commercial, are required to purchase flood insurance if their property is identified as being in a Special Flood Hazard Area (SFHA, which is equivalent to having an estimated 1% or greater risk of flooding every year) and is in a community that participates in the NFIP. Without available flood insurance, real estate transactions in an SFHA would be potentially significantly hampered. \nIn the Biggert-Waters Flood Insurance Reform Act of 2012 (Title II of P.L. 112-141), Congress explicitly allowed federal agencies to accept private flood insurance to fulfill this mortgage requirement if the private flood insurance met the conditions defined in statute. The private flood insurance market, however, has been slow to develop and the mandatory purchase requirement is still generally met through NFIP coverage.\nPast Lapses of the NFIP\nThe NFIP was extended 17 times between 2008 and 2012, and lapsed four times: March 1 to March 2, 2010; March 29 to April 15, 2010; June 1 to July 2, 2010; and October 1 to October 5, 2011. In most cases when the NFIP lapsed, Congress reauthorized the NFIP retroactively. During these NFIP lapses, the FDIC issued guidance to lending institutions, and the Federal Reserve also issued informal guidance to lenders. FEMA provided guidance for the Write-Your-Own (WYO) Program, where private insurance companies are paid to write and service NFIP policies.\nIn past NFIP lapses, borrowers were not able to obtain flood insurance to close, renew, or increase loans secured by property in a SFHA until the NFIP was reauthorized. During the lapse in June 2010, estimates suggest that over 1,400 home sale closings were cancelled or delayed each day, representing over 40,000 sales per month. These figures applied to residential properties, but commercial properties were also affected by the NFIP lapse. In addition, the largest WYO insurer left the NFIP in 2011 reportedly because of the administrative burden associated with very short-term reauthorizations and lapses in authorization. Although no detailed analysis of the NFIP lapses in 2010 and 2011 has been undertaken, the economic impact could potentially have been broader than the reported effects on the domestic real estate market.", "type": "CRS Insight", "typeId": "INSIGHTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/IN10835", "sha1": "e2953a8c5481311fd98439a4d62517bc58ff02f0", "filename": "files/20180416_IN10835_e2953a8c5481311fd98439a4d62517bc58ff02f0.html", "images": {} }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/IN10835", "sha1": "bc223d3865306ef2481bb92c42e3a79518b77516", "filename": "files/20180416_IN10835_bc223d3865306ef2481bb92c42e3a79518b77516.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4845, "name": "Federal Emergency Management" } ] }, { "source": "EveryCRSReport.com", "id": 578856, "date": "2018-03-05", "retrieved": "2018-03-09T00:02:13.905866", "title": "What Happens If the National Flood Insurance Program (NFIP) Lapses?", "summary": "This Insight provides a short overview of what would happen if the NFIP were not to be reauthorized by March 23, 2018, and allowed to lapse. See CRS Report R45099, National Flood Insurance Program: Selected Issues and Legislation in the 115th Congress for the current status of NFIP reauthorization legislation. \nExpiration of Certain NFIP Authorities\nThe National Flood Insurance Program (NFIP) is authorized by the National Flood Insurance Act of 1968 (Title XIII of P.L. 90-448, as amended, 42 U.S.C. \u00a74001 et seq.). The NFIP does not contain a single comprehensive expiration, termination, or sunset provision for the whole of the program. Rather, the NFIP has multiple different legal provisions that tie to the expiration of key components of the program.\nAuthorization of the NFIP was extended from September 30, 2017, until December 8, 2017 (Section 130 of P.L. 115-56), extended again until December 22, 2017 (P.L. 115-90), and again until January 19, 2018 (P.L. 115-96). The NFIP lapsed between January 20 and January 22, 2018, and received a fourth short-term reauthorization until February 8, 2018 (P.L. 115-120). This legislation also authorized FEMA to honor all policy-related transactions accepted during the NFIP lapse. The NFIP lapsed again for approximately eight hours during a brief government shut-down in the early morning of February 9, 2018, and was then reauthorized until March 23, 2018 (P.L. 115-123).\nThe cancellation of $16 billion of NFIP debt (P.L. 115-72) has no effect on the impact of a lapse of NFIP authorization. The 21st Century Flood Reform Act (H.R. 2874), passed by the House in November 2017, would reauthorize the NFIP until September 30, 2022. Three bills have been introduced in the Senate to extend the NFIP authorization (S. 1313, S. 1368, and S. 1571), but the Senate Committee on Banking, Housing, and Urban Affairs has yet to take any formal action. \nUnless reauthorized or amended by Congress, the following will occur on March 23, 2018:\nThe authority to provide new flood insurance contracts will expire. Flood insurance contracts entered into before the expiration would continue until the end of their policy term of one year. \nThe authority for NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion. \nOther activities of the program would technically remain authorized following March 23, 2018, such as the issuance of Flood Mitigation Assistance Grants. However, the expiration of the key authorities listed above would have potentially significant impacts on the remaining NFIP activities. \nThe NFIP is the primary source of flood insurance coverage for residential properties in the United States. As of December 2017, the NFIP had 5 million flood insurance policies providing over $1.27 trillion in coverage, with approximately 23,000 communities in 56 states and jurisdictions participating. The program collects about $3.6 billion in annual premium revenue.\nIf there were to be a lapse in authorization on or after March 23, 2018, and the borrowing authority is reduced to $1 billion, FEMA would continue to adjust and pay claims as premium dollars come into the National Flood Insurance Fund (NFIF) and reserve fund. If the funds available to pay claims were to be depleted, claims would have to wait until sufficient premium dollars were received to pay them unless Congress were to appropriate supplemental funds to the NFIP to pay claims or increase the borrowing limit. \nThe Mandatory Purchase Requirement\nThe expiration of the NFIP\u2019s authority to provide new flood insurance contracts has potentially significant implications due to the mandatory purchase requirement. By law or regulation, federal agencies, federally regulated lending institutions, and government-sponsored enterprises must require certain property owners to purchase flood insurance as a condition of any mortgage that these entities make, guarantee, or purchase. Property owners, both residential and commercial, are required to purchase flood insurance if their property is identified as being in a Special Flood Hazard Area (SFHA, which is equivalent to having an estimated 1% or greater risk of flooding every year) and is in a community that participates in the NFIP. Without available flood insurance, real estate transactions in an SFHA would be potentially significantly hampered. \nIn the Biggert-Waters Flood Insurance Reform Act of 2012 (Title II of P.L. 112-141), Congress explicitly allowed federal agencies to accept private flood insurance to fulfill this mortgage requirement if the private flood insurance met the conditions defined in statute. The private flood insurance market, however, has been slow to develop and the mandatory purchase requirement is still generally met through NFIP coverage.\nPast Lapses of the NFIP\nThe NFIP was extended 17 times between 2008 and 2012, and lapsed four times: March 1 to March 2, 2010; March 29 to April 15, 2010; June 1 to July 2, 2010; and October 1 to October 5, 2011. In most cases when the NFIP lapsed, Congress reauthorized the NFIP retroactively. During these NFIP lapses, the FDIC issued guidance to lending institutions, and the Federal Reserve also issued informal guidance to lenders. FEMA provided guidance for the Write-Your-Own (WYO) Program, where private insurance companies are paid to write and service NFIP policies.\nIn past NFIP lapses, borrowers were not able to obtain flood insurance to close, renew, or increase loans secured by property in a SFHA until the NFIP was reauthorized. During the lapse in June 2010, estimates suggest that over 1,400 home sale closings were cancelled or delayed each day, representing over 40,000 sales per month. These figures applied to residential properties, but commercial properties were also affected by the NFIP lapse. In addition, the largest WYO insurer left the NFIP in 2011 reportedly because of the administrative burden associated with very short-term reauthorizations and lapses in authorization. Although no detailed analysis of the NFIP lapses in 2010 and 2011 has been undertaken, the economic impact could potentially have been broader than the reported effects on the domestic real estate market.", "type": "CRS Insight", "typeId": "INSIGHTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/IN10835", "sha1": "2b778abd0bcb1c1d7934630a11806b9a14fe46e2", "filename": "files/20180305_IN10835_2b778abd0bcb1c1d7934630a11806b9a14fe46e2.html", "images": {} }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/IN10835", "sha1": "bd1b96209761540dc2a1ba5e5a8f96f9e3928ed4", "filename": "files/20180305_IN10835_bd1b96209761540dc2a1ba5e5a8f96f9e3928ed4.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4845, "name": "Federal Emergency Management" } ] }, { "source": "EveryCRSReport.com", "id": 577815, "date": "2018-01-23", "retrieved": "2018-01-26T14:22:48.164104", "title": "What Happens If the National Flood Insurance Program (NFIP) Lapses?", "summary": "This Insight provides a short overview of what would happen if the NFIP were not to be reauthorized by February 8, 2018, and allowed to lapse. See CRS Report R45019, 21st Century Flood Reform Act (H.R. 2874): Reforming the National Flood Insurance Program, for more information on the current status of NFIP reauthorization legislation. \nExpiration of Certain NFIP Authorities\nThe National Flood Insurance Program (NFIP) is authorized by the National Flood Insurance Act of 1986 (Title XIII of P.L. 90-448, as amended, 42 U.S.C. \u00a7\u00a74001 et seq.). The NFIP does not contain a single comprehensive expiration, termination, or sunset provision for the whole of the program. Rather, the NFIP has multiple different legal provisions that generally tie to the expiration of key components of the program.\nAuthorization of the NFIP was extended from September 30, 2017, until December 8, 2017 (Section 130 of P.L. 115-56), extended again until December 22, 2017 (P.L. 115-90), and again until January 19, 2018 (P.L. 115-96). The NFIP lapsed between January 20 and January 22, 2018, and was reauthorized until February 8, 2018 (H.R. 195). The legislation also authorized FEMA to honor all policy-related transactions accepted between January 20 and January 22, 2018, during the NFIP lapse.\nThe cancellation of $16 billion of NFIP debt (P.L. 115-72) has no effect on the impact of a lapse of NFIP authorization. The 21st Century Flood Reform Act (H.R. 2874), passed by the House in November 2017, would reauthorize the NFIP until September 30, 2022. Three bills have been introduced in the Senate to extend the NFIP authorization (S. 1313, S. 1368, and S. 1571), but the Senate Committee on Banking, Housing, and Urban Affairs has yet to take any formal action. \nUnless reauthorized or amended by Congress, the following will occur on February 8, 2018:\nThe authority to provide new flood insurance contracts will expire. Flood insurance contracts entered into before the expiration would continue until the end of their policy term of one year. \nThe authority for NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion. \nOther activities of the program would technically remain authorized following February 8, 2018, such as the issuance of Flood Mitigation Assistance Grants. However, the expiration of the key authorities listed above would have potentially significant impacts on the remaining NFIP activities. \nThe NFIP is the primary source of flood insurance coverage for residential properties in the United States. As of October 2017, the NFIP had 5 million flood insurance policies providing nearly $1.27 trillion in coverage, with approximately 23,000 communities in 56 states and jurisdictions participating. The program collects about $3.6 billion in annual premium revenue.\nIf there were to be a lapse in authorization on or after February 8, 2018, and the borrowing authority is reduced to $1 billion, FEMA would continue to adjust and pay claims as premium dollars come into the National Flood Insurance Fund (NFIF) and reserve fund. If the funds available to pay claims were to be depleted, claims would have to wait until sufficient premium dollars were received to pay them unless Congress were to appropriate supplemental funds to the NFIP to pay claims or increase the borrowing limit. In the event that Congress were not to provide funding to cover unpaid claims, policyholders might be able to avail themselves of judicial remedies to recover these funds from the U.S. Treasury.\nThe Mandatory Purchase Requirement\nThe expiration of the NFIP\u2019s authority to provide new flood insurance contracts has potentially significant implications due to the mandatory purchase requirement. By law or regulation, federal agencies, federally regulated lending institutions, and government-sponsored enterprises (GSEs) must require certain property owners to purchase flood insurance as a condition of any mortgage that these entities make, guarantee, or purchase. Property owners, both residential and commercial, are required to purchase flood insurance if their property is identified as being in a Special Flood Hazard Area (SFHA, which is equivalent to having an estimated 1% or greater risk of flooding every year) and is in a community that participates in the NFIP. Without available flood insurance, real estate transactions in an SFHA would be potentially significantly hampered. \nIn the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12, Title II of P.L. 112-141), Congress explicitly allowed federal agencies to accept private flood insurance to fulfill this mortgage requirement instead of the NFIP standard flood insurance policy, if the private flood insurance met the conditions defined in statute. The private flood insurance market, however, has been slow to develop following BW-12 and the mandatory purchase requirement is still generally met through NFIP coverage.\nPast Lapses of the NFIP\nThe NFIP was extended 17 times between 2008 and 2012, and lapsed four times: from March 1 to March 2, 2010; from March 29 to April 15, 2010; from June 1 to July 2, 2010; and from October 1 to October 5, 2011. In most cases when the NFIP lapsed, Congress reauthorized the NFIP retroactively. During these NFIP lapses, the FDIC issued guidance to lending institutions, and the Federal Reserve also issued informal guidance to lenders. FEMA provided guidance for the Write-Your-Own (WYO) Program, where private insurance companies are paid to write and service NFIP policies.\nWhen the NFIP lapsed in the past, borrowers were not able to obtain flood insurance to close, renew, or increase loans secured by property in a SFHA until the NFIP was reauthorized. During the lapse in June 2010, estimates suggest that over 1,400 home sale closings were cancelled or delayed each day, representing over 40,000 sales per month. These figures applied to residential properties, but commercial properties were also affected by the NFIP lapse. In addition, the largest WYO insurer left the NFIP in 2011 reportedly because of the administrative burden associated with very short-term reauthorizations and lapses in authorization. Although no detailed analysis of the NFIP lapses in 2010 and 2011 has been undertaken, the economic impact could potentially have been broader than the reported effects on the domestic real estate market.", "type": "CRS Insight", "typeId": "INSIGHTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/IN10835", "sha1": "7b0b088385bb6f6507f63cc2d7d79d3c3f34a4d6", "filename": "files/20180123_IN10835_7b0b088385bb6f6507f63cc2d7d79d3c3f34a4d6.html", "images": {} }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/IN10835", "sha1": "6ad6ffa49eb4dc5aed967e8c24fc9352ef75717e", "filename": "files/20180123_IN10835_6ad6ffa49eb4dc5aed967e8c24fc9352ef75717e.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4845, "name": "Federal Emergency Management" } ] }, { "source": "EveryCRSReport.com", "id": 577339, "date": "2018-01-03", "retrieved": "2018-01-05T14:22:02.938409", "title": "What Happens If the National Flood Insurance Program (NFIP) Lapses?", "summary": "This Insight provides a short overview of what would happen if the NFIP were not to be reauthorized by January 19, 2018, and allowed to lapse. See CRS Report R45019, 21st Century Flood Reform Act (H.R. 2874): Reforming the National Flood Insurance Program, by Diane P. Horn for more information on the current status of NFIP reauthorization legislation. \nExpiration of Certain NFIP Authorities\nThe National Flood Insurance Program (NFIP) is authorized by the National Flood Insurance Act of 1986 (Title XIII of P.L. 90-448, as amended, 42 U.S.C. \u00a7\u00a74001 et seq.). The NFIP does not contain a single comprehensive expiration, termination, or sunset provision for the whole of the program. Rather, the NFIP has multiple different legal provisions that generally tie to the expiration of key components of the program.\nAuthorization of the NFIP was extended from September 30, 2017, until December 8, 2017 (Section 130 of P.L. 115-56), extended again until December 22, 2017 (P.L. 115-90), and extended a third time until January 19, 2018 (P.L. 115-96). The recent cancellation of $16 billion of NFIP debt (P.L. 115-72) has essentially no effect on the impact of a lapse of NFIP authorization. The 21st Century Flood Reform Act (H.R. 2874), passed by the House in November 2017, would reauthorize the NFIP until September 30, 2022. Three bills have been introduced in the Senate to extend the NFIP authorization (S. 1313, S. 1368, and S. 1571), but the Senate Committee on Banking, Housing, and Urban Affairs has yet to take any formal action. \nUnless reauthorized or amended by Congress, the following will occur on January 19, 2018:\nThe authority to provide new flood insurance contracts will expire. Flood insurance contracts entered into before the expiration would continue until the end of their policy term of one year. \nThe authority for NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion. \nOther activities of the program would technically remain authorized following January 19, 2018, such as the issuance of Flood Mitigation Assistance Grants. However, the expiration of the key authorities listed above would have potentially significant impacts on the remaining NFIP activities. \nThe NFIP is the primary source of flood insurance coverage for residential properties in the United States. As of October 2017, the NFIP had 5 million flood insurance policies providing nearly $1.27 trillion in coverage, with approximately 23,000 communities in 56 states and jurisdictions participating in the NFIP. The program collects about $3.6 billion in annual premium revenue. \nIf there were to be a lapse in authorization on or after January 19, 2018, and the borrowing authority is reduced to $1 billion, FEMA would continue to adjust and pay claims as premium dollars come into the National Flood Insurance Fund (NFIF) and reserve fund. If the funds available to pay claims were to be depleted, claims would have to wait until sufficient premium dollars were received to pay them unless Congress were to appropriate supplemental funds to the NFIP to pay claims or increase the borrowing limit. In the event that Congress were not to provide funding to cover unpaid claims, policyholders might be able to avail themselves of judicial remedies to recover these funds from the U.S. Treasury.\nThe Mandatory Purchase Requirement\nThe expiration of the NFIP\u2019s authority to provide new flood insurance contracts has potentially significant implications due to the mandatory purchase requirement. By law or regulation, federal agencies, federally regulated lending institutions, and government-sponsored enterprises (GSEs) must require certain property owners to purchase flood insurance as a condition of any mortgage that these entities make, guarantee, or purchase. Property owners, both residential and commercial, are required to purchase flood insurance if their property is identified as being in a Special Flood Hazard Area (SFHA, which is equivalent to having an estimated 1% or greater risk of flooding every year) and is in a community that participates in the NFIP. Without available flood insurance, real estate transactions in an SFHA would be potentially significantly hampered. \nIn the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12, Title II of P.L. 112-141), Congress explicitly allowed federal agencies to accept private flood insurance to fulfill this mortgage requirement instead of the NFIP standard flood insurance policy, if the private flood insurance met the conditions defined in statute. The private flood insurance market, however, has been slow to develop following BW-12 and the mandatory purchase requirement is still generally met through NFIP coverage.\nPast Lapses of the NFIP\nThe NFIP was extended 17 times between 2008 and 2012, and lapsed four times: from March 1 to March 2, 2010; from March 29 to April 15, 2010; from June 1 to July 2, 2010; and from October 1 to October 5, 2011. In most cases when the NFIP lapsed, Congress reauthorized the NFIP retroactively. During these NFIP lapses, the FDIC issued guidance to lending institutions, and the Federal Reserve also issued informal guidance to lenders. FEMA provided guidance for the Write-Your-Own (WYO) Program, where private insurance companies are paid to write and service NFIP policies.\nWhen the NFIP lapsed in the past, borrowers were not able to obtain flood insurance to close, renew, or increase loans secured by property in a SFHA until the NFIP was reauthorized. During the lapse in June 2010, estimates suggest that over 1,400 home sale closings were cancelled or delayed each day, representing over 40,000 sales per month. These figures applied to residential properties, but commercial properties were also affected by the NFIP lapse. In addition, the largest WYO insurer left the NFIP in 2011 reportedly because of the administrative burden associated with very short-term reauthorizations and lapses in authorization. Although no detailed analysis of the NFIP lapses in 2010 and 2011 has been undertaken, the economic impact could have potentially been broader than the reported effects on the domestic real estate market.", "type": "CRS Insight", "typeId": "INSIGHTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/IN10835", "sha1": "3350506362358eeb8233e2dcd73d41d5f94b124f", "filename": "files/20180103_IN10835_3350506362358eeb8233e2dcd73d41d5f94b124f.html", "images": {} }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/IN10835", "sha1": "20b3393fd009aed893df61ea074e32d270ab8530", "filename": "files/20180103_IN10835_20b3393fd009aed893df61ea074e32d270ab8530.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4845, "name": "Federal Emergency Management" } ] }, { "source": "EveryCRSReport.com", "id": 576696, "date": "2017-12-14", "retrieved": "2017-12-19T13:50:16.734522", "title": "What Happens If the National Flood Insurance Program (NFIP) Lapses?", "summary": "This Insight provides a short overview of what would happen if the NFIP were not to be reauthorized by December 22, 2017, and allowed to lapse. See CRS Report R45019, 21st Century Flood Reform Act (H.R. 2874): Reforming the National Flood Insurance Program, by Diane P. Horn for more information on the current status of NFIP reauthorization legislation. \nExpiration of Certain NFIP Authorities\nThe National Flood Insurance Program (NFIP) is authorized by the National Flood Insurance Act of 1986 (Title XIII of P.L. 90-448, as amended, 42 U.S.C. \u00a7\u00a74001 et seq.). The NFIP does not contain a single comprehensive expiration, termination, or sunset provision for the whole of the program. Rather, the NFIP has multiple different legal provisions that generally tie to the expiration of key components of the program.\nAuthorization of the NFIP was extended from September 30, 2017, until December 8, 2017 (Section 130 of P.L. 115-56), and extended again until December 22, 2017 (P.L. 115-90). The recent cancellation of $16 billion of NFIP debt (P.L. 115-72) has essentially no effect on the impact of a lapse of NFIP authorization. The 21st Century Flood Reform Act (H.R. 2874), recently passed by the House, would reauthorize the NFIP until September 30, 2022. Three bills have been introduced in the Senate to extend the NFIP authorization (S. 1313, S. 1368, and S. 1571), but the Senate Committee on Banking, Housing, and Urban Affairs has yet to take any formal action. \nUnless reauthorized or amended by Congress, the following will occur on December 22, 2017:\nThe authority to provide new flood insurance contracts will expire. Flood insurance contracts entered into before the expiration would continue until the end of their policy term of one year. \nThe authority for NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion. \nOther activities of the program would technically remain authorized following December 22, 2017, such as the issuance of Flood Mitigation Assistance Grants. However, the expiration of the key authorities listed above would have potentially significant impacts on the remaining NFIP activities. \nThe NFIP is the primary source of flood insurance coverage for residential properties in the United States. As of September 2017, the NFIP had 4.94 million flood insurance policies providing nearly $1.24 trillion in coverage, with approximately 23,000 communities in 56 states and jurisdictions participating in the NFIP. The program collects about $3.5 billion in annual premium revenue. \nIf there were to be a lapse in authorization on or after December 22, 2017, and the borrowing authority is reduced to $1 billion, FEMA would continue to adjust and pay claims as premium dollars come into the National Flood Insurance Fund (NFIF) and reserve fund. If the funds available to pay claims were to be depleted, claims would have to wait until sufficient premium dollars were received to pay them unless Congress were to appropriate supplemental funds to the NFIP to pay claims or increase the borrowing limit. In the event that Congress were not to provide funding to cover unpaid claims, policyholders might be able to avail themselves of judicial remedies to recover these funds from the U.S. Treasury.\nThe Mandatory Purchase Requirement\nThe expiration of the NFIP\u2019s authority to provide new flood insurance contracts has potentially significant implications due to the mandatory purchase requirement. By law or regulation, federal agencies, federally regulated lending institutions, and government-sponsored enterprises (GSEs) must require certain property owners to purchase flood insurance as a condition of any mortgage that these entities make, guarantee, or purchase. Property owners, both residential and commercial, are required to purchase flood insurance if their property is identified as being in a Special Flood Hazard Area (SFHA, which is equivalent to having an estimated 1% or greater risk of flooding every year) and is in a community that participates in the NFIP. Without available flood insurance, real estate transactions in an SFHA would be potentially significantly hampered. \nIn the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12, Title II of P.L. 112-141), Congress explicitly allowed federal agencies to accept private flood insurance to fulfill this mortgage requirement instead of the NFIP standard flood insurance policy, if the private flood insurance met the conditions defined in statute. The private flood insurance market, however, has been slow to develop following BW-12 and the mandatory purchase requirement is still generally met through NFIP coverage.\nPast Lapses of the NFIP\nThe NFIP was extended 17 times between 2008 and 2012, and lapsed four times: from March 1 to March 2, 2010; from March 29 to April 15, 2010; from June 1 to July 2, 2010; and from October 1 to October 5, 2011. In most cases when the NFIP lapsed, Congress reauthorized the NFIP retroactively. During these NFIP lapses, the FDIC issued guidance to lending institutions, and the Federal Reserve also issued informal guidance to lenders. FEMA provided guidance for the Write-Your-Own (WYO) Program, where private insurance companies are paid to write and service NFIP policies.\nWhen the NFIP lapsed in the past, borrowers were not able to obtain flood insurance to close, renew, or increase loans secured by property in a SFHA until the NFIP was reauthorized. During the lapse in June 2010, estimates suggest that over 1,400 home sale closings were cancelled or delayed each day, representing over 40,000 sales per month. These figures applied to residential properties, but commercial properties were also affected by the NFIP lapse. In addition, the largest WYO insurer left the NFIP in 2011 reportedly because of the administrative burden associated with very short-term reauthorizations and lapses in authorization. Although no detailed analysis of the NFIP lapses in 2010 and 2011 has been undertaken, the economic impact could have potentially been broader than the reported effects on the domestic real estate market.", "type": "CRS Insight", "typeId": "INSIGHTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/IN10835", "sha1": "2c4a9f9ea61e5a9b2deb08f7e6ba1aa114e7d888", "filename": "files/20171214_IN10835_2c4a9f9ea61e5a9b2deb08f7e6ba1aa114e7d888.html", "images": {} }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/IN10835", "sha1": "86d3d93667280069900cea57ad1b858da037f831", "filename": "files/20171214_IN10835_86d3d93667280069900cea57ad1b858da037f831.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4845, "name": "Federal Emergency Management" } ] }, { "source": "EveryCRSReport.com", "id": 576145, "date": "2017-12-05", "retrieved": "2017-12-07T14:06:06.980793", "title": "What Happens If the National Flood Insurance Program (NFIP) Lapses?", "summary": "This Insight provides a short overview of what would happen if the NFIP were not to be reauthorized by December 8, 2017, and allowed to lapse. See CRS Report R45019, 21st Century Flood Reform Act (H.R. 2874): Reforming the National Flood Insurance Program, by Diane P. Horn for more information on the current status of NFIP reauthorization legislation. \nExpiration of Certain NFIP Authorities\nThe National Flood Insurance Program (NFIP) is authorized by the National Flood Insurance Act of 1986 (Title XIII of P.L. 90-448, as amended, 42 U.S.C. \u00a7\u00a74001 et seq.). The NFIP does not contain a single comprehensive expiration, termination, or sunset provision for the whole of the program. Rather, the NFIP has multiple different legal provisions that generally tie to the expiration of key components of the program.\nAuthorization of the NFIP was extended from September 30, 2017, until December 8, 2017 (Section 130 of P.L. 115-56). The recent cancellation of $16 billion of NFIP debt (P.L. 115-72) has essentially no effect on the impact of a lapse of NFIP authorization. The 21st Century Flood Reform Act (H.R. 2874), recently passed by the House, would reauthorize the NFIP until September 30, 2022. Three bills have been introduced in the Senate to extend the NFIP authorization (S. 1313, S. 1368, and S. 1571), but the Senate Committee on Banking, Housing, and Urban Affairs has yet to take any formal action. \nUnless reauthorized or amended by Congress, the following will occur on December 8, 2017:\nThe authority to provide new flood insurance contracts will expire. Flood insurance contracts entered into before the expiration would continue until the end of their policy term of one year. \nThe authority for NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion. \nOther activities of the program would technically remain authorized following December 8, 2017, such as the issuance of Flood Mitigation Assistance Grants. However, the expiration of the key authorities listed above would have potentially significant impacts on the remaining NFIP activities. \nThe NFIP is the primary source of flood insurance coverage for residential properties in the United States. As of September 2017, the NFIP had 4.94 million flood insurance policies providing nearly $1.24 trillion in coverage, with approximately 23,000 communities in 56 states and jurisdictions participating in the NFIP. The program collects about $3.5 billion in annual premium revenue. \nIf there were to be a lapse in authorization on or after December 8, 2017, and the borrowing authority is reduced to $1 billion, FEMA would continue to adjust and pay claims as premium dollars come into the National Flood Insurance Fund (NFIF) and reserve fund. If the funds available to pay claims were to be depleted, claims would have to wait until sufficient premium dollars were received to pay them unless Congress were to appropriate supplemental funds to the NFIP to pay claims or increase the borrowing limit. In the event that Congress were not to provide funding to cover unpaid claims, policyholders might be able to avail themselves of judicial remedies to recover these funds from the U.S. Treasury.\nThe Mandatory Purchase Requirement\nThe expiration of the NFIP\u2019s authority to provide new flood insurance contracts has potentially significant implications due to the mandatory purchase requirement. By law or regulation, federal agencies, federally regulated lending institutions, and government-sponsored enterprises (GSEs) must require certain property owners to purchase flood insurance as a condition of any mortgage that these entities make, guarantee, or purchase. Property owners, both residential and commercial, are required to purchase flood insurance if their property is identified as being in a Special Flood Hazard Area (SFHA, which is equivalent to having an estimated 1% or greater risk of flooding every year) and is in a community that participates in the NFIP. Without available flood insurance, real estate transactions in an SFHA would be potentially significantly hampered. \nIn the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12, Title II of P.L. 112-141), Congress explicitly allowed federal agencies to accept private flood insurance to fulfill this mortgage requirement instead of the NFIP standard flood insurance policy, if the private flood insurance met the conditions defined in statute. The private flood insurance market, however, has been slow to develop following BW-12 and the mandatory purchase requirement is still generally met through NFIP coverage.\nPast Lapses of the NFIP\nThe NFIP was extended 17 times between 2008 and 2012, and lapsed four times: from March 1 to March 2, 2010; from March 29 to April 15, 2010; from June 1 to July 2, 2010; and from October 1 to October 5, 2011. In most cases when the NFIP lapsed, Congress reauthorized the NFIP retroactively. During these NFIP lapses, the FDIC issued guidance to lending institutions, and the Federal Reserve also issued informal guidance to lenders. FEMA provided guidance for the Write-Your-Own (WYO) Program, where private insurance companies are paid to write and service NFIP policies.\nWhen the NFIP lapsed in the past, borrowers were not able to obtain flood insurance to close, renew, or increase loans secured by property in a SFHA until the NFIP was reauthorized. During the lapse in June 2010, estimates suggest that over 1,400 home sale closings were cancelled or delayed each day, representing over 40,000 sales per month. These figures applied to residential properties, but commercial properties were also affected by the NFIP lapse. In addition, the largest WYO insurer left the NFIP in 2011 reportedly because of the administrative burden associated with very short-term reauthorizations and lapses in authorization. Although no detailed analysis of the NFIP lapses in 2010 and 2011 has been undertaken, the economic impact could have potentially been broader than the reported effects on the domestic real estate market.", "type": "CRS Insight", "typeId": "INSIGHTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/IN10835", "sha1": "2d0c700df59b928bb73e1f704e4a1750a913a37a", "filename": "files/20171205_IN10835_2d0c700df59b928bb73e1f704e4a1750a913a37a.html", "images": {} }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/IN10835", "sha1": "9a3ed225935c869ac3c8c2a64119305a14721b31", "filename": "files/20171205_IN10835_9a3ed225935c869ac3c8c2a64119305a14721b31.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4845, "name": "Federal Emergency Management" } ] } ], "topics": [] }