Realtors, others seek renewal of flood insurance ? Bismarck ...

Will flood insurance still be offered in the future?

The existing National Flood Insurance Program is set to expire Sept. 30, and local Realtors caution that failing to extend it might put some home loans being processed at risk. It might shake up the housing market across the country, according to the National Realtors Association.

Federal flood insurance is required for federally backed home loans of properties identified within a 100-year flood plain and offered through the Federal Emergency Management Agency. Under the national flood insurance program, a residential home can be insured for up to $250,000 and up to $500,000 for non-residential properties. It covers direct physical losses to the structure, support for elevated building, utility connections and mechanical equipment needed to live in the building.

"If coverage is not reauthorized, it may not be available to buy," said Greg Larson, past president of the North Dakota Association of Realtors.

Nancy Deichert, executive director of Bismarck-Mandan Board of Realtors, said Realtors urge clients to purchase insurance before the deadline so buyers don't risk losing home loans. According to Howard Malloy at Bismarck Title Co., so far this year the firm has recorded (in the multiple listing service) 1,044 property closings - but the firm doesn't track the number that require flood insurance. Those figures exclude homes sold privately by owners.

After Sept. 30, the national flood insurance program would not have authority to issue new or renewed policies unless a new flood insurance program is enacted. This will not affect existing policies and renewal policies within the 30-day grace period or policies purchased prior to the program's lapse. "No new insurance can be written from that day (Sept. 30) if Congress takes no action," said Dan Accurti, of the FEMA office in Bismarck. "If someone had an effective policy, that claim would be honored."

Accurti could not answer what the lack of non-renewal or extension of the flood program would mean for property owners flooded now or what happens when existing premiums expire. Accurti referred other questions to 1-800-638-6200. The Tribune phoned the number twice Thursday afternoon, but no one answered.

The national Realtor group supports making the national flood insurance a five-year program, improving accuracy of flood insurance rate maps, continued inclusion of comprehensive coverage for residences (including rental properties and second homes), and making reforms that provide "full risk" premiums for most repetitive loss structures in many states.

Deichert said members of the North Dakota Association of Realtors and local Realtors have supported the national stance by directly doing call-ins to the congressional delegation or writing letters of support to the national Realtors group.

"Flood insurance has been renewed 10 times in the last five years," Deichert said.

On July 12, the U.S. House passed the Flood Insurance Reform Act bill to extend the flood insurance program by five years, but it still needs Senate action. Two messages were left for Sen. John Hoeven's staff Thursday, but the calls were not returned. Sen. Kent Conrad's staff reported Thursday afternoon that he was traveling and could not be reached.

Congress has approved a series of short-term extensions of flood insurance programs over the years while they seek long-term fiscal reforms, according to the national Realtor group.

Deichert said the national Realtor group has fought against the program lapsing and reported it might jeopardize 40,000 home loan closings per month across the country. The national Realtor group estimates that 8 percent of housing units or 10 million homes are located within FEMA's 100-year flood plains.

Joe Sheenan, vice president of mortgages at the Cornerstone Bank, said on the short-term "There aren't a lot of pending sales for flood properties. ... In the long-term, if people want to move their properties (in the flood plain) and lenders can't close on the sale, it will affect the housing market." He favors residents calling the congressional delegation for the extension. He said if the properties cannot be insured and sales cannot be closed, it could damage the overall stable, healthy housing market growth the Bismarck-Mandan area is accustomed to.

Deichert said if there were no longer a flood insurance program maybe lenders "would consider higher down payments or higher interest rates for properties in the flood plain - a lender would need to tell you if they've considered what, if anything, they would do differently if the flood insurance program were not renewed by Sept. 30."

(Reach reporter LeAnn Eckroth at 250-8264 or leann.eckroth@bismarcktribune.com)

Source: http://news.tradingedgemaster.com/realtors-others-seek-renewal-of-flood-insurance-bismarck-tribune/

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