Federal Flood Insurance Program Closed For Weeks (sale, real estate)

[USCJoe]

As many forum members have an interest in real estate and may be about to close on a home or consider purchasing one in the very near future, I thought that the following information might be of interest and value. It was received from our Broker-in-Charge from Allstate Insurance

Those possibly affected may want to contact their Realtor, closing attorney and/or lender.

March 26, 2010
As insurance and real estate agents and homeowners feared, Congress left Washington without extending the federal flood insurance program.
Congress adjourned until April 12 after failing to agree on an unemployment benefits bill that included a provision with an extension of the National Flood Insurance Program.
As a result, the federal flood insurance program's authority to write new policies ends on Sunday, March 28 at midnight. After that time, insurance agents will not be able to provide new or renewal flood insurance policies, which are required by lenders to close on some real estate sales.
Senator Tom Coburn, R- Okla., blocked the Senate from voting on the bill to extend the jobless benefits arguing that to do so would add to the deficit. Democrats argued that the measure qualified as emergency spending.
A similar impasse occurred at the end of February and the NFIP was closed for several days until Congress renewed it on March 2.
But this time the hiatus will be longer.
Congress could reinstate the NFIP and other affected programs retroactively when it returns on April 12.
The NFIP expiration last month caused headaches for insurance agents and their customers as well as delays for some consumers waiting to close on the sale of a property within a flood hazard area.
While no new policies can be issued during a lapse in NFIP authorization, consumers with current flood insurance policies remain covered. Claims payments are not affected.

[beachme]

Not good...not good at all.

[gnu2308]

I close at the end of the month of April, we were just getting quotes for Homeowners insurance last week. I guess we will have to wait until April 12th. I hope the mortgage company is sympathetic.

[beachme]

If they require flood insurance they will understand. If not you can close and add it once its available again.

[beachme]

Private flood insurance is still available.

[USCJoe]

You can also have the seller obtain a form from their insurance company authorizing them to transfer your flood policy into the name of the new buyers.

Originally Posted by beachme

Private flood insurance is still available.

[DJShymansky]

There are ways of possibly getting around this, though. Although each lending authority notes considerations, the consensus is, in most cases, loan closings -may- still occur during the NFIP lapse with verification of the submission of a NFIP flood policy application and premium payment submission to WYO insurance provider. It's not a guarantee, of course.

[beachme]

Flood Insurance Update
Date: 3/31/2010
[SIZE=1]Updated 04/02/10[/SIZE]
Regulators Issue Guidance to Allow Loan Closings During NFIP Lapse Six of the nation's largest lending authorities have issued guidance to administer the federal flood insurance regulations during the current National Flood Insurance Program (NFIP) lapse in authority (see below).

Although each lending authority notes considerations, the consensus is, in most
cases, loan closings may still occur during the NFIP lapse with verification of the submission of a NFIP flood policy application and premium payment submission to the insurance provider.

Lenders should follow all normal flood risk evaluations prior to closing and establish follow up practices to
monitor full compliance upon the re-authorization of the NFIP program. Lenders should become familiar with and follow the specific guidance offered by their lending authority.
When Congress returns on April 12, NAR will encourage them to act swiftly to reauthorize and extend the NFIP, and insist that the re-authorization should be made retroactive to March 28, 2010, so that any properties that are flooded during this lapse will be covered by the program.

[jstarch]

Thanks for the information on flood insurance. My family and I are thinking of moving to the Mt. Pleasant area. When we get ready to buy a home...do we need flood insurance, earthquake insurance, and more? If so...what is an approximate cost (premium) for a $500,000 home?

[USCJoe]

A large percentage of the homes in Mt. Pleasant will require flood insurance should you have a mortgage. Rates will vary, but in most cases the annual premium will be in the $250 to $500 range. A very good article on earthquake insurance can be found here and may answer many of your questions. Home insurance will cost a bit more on homes east of highway 17 than for homes west of highway 17.

Originally Posted by jstarch

Thanks for the information on flood insurance. My family and I are thinking of moving to the Mt. Pleasant area. When we get ready to buy a home...do we need flood insurance, earthquake insurance, and more? If so...what is an approximate cost (premium) for a $500,000 home?