Posted on 12 Apr 2010
The Senate's gridlock on extending unemployment benefits before its recess also set in motion the expiration of the National Flood Insurance Program (NFIP) on March 28, causing thousands of people trying to buy new homes to hold off on closing their deals due to lack of coverage. Today the Senate has returned and could advance a provision reinstating the flood insurance program as part of a bill extending unemployment benefits and subsidies for COBRA health insurance.
The Senate is set to vote on whether to end the debate on the legislation now that it has returned to session. Before Congress left town for its Spring recess, Senator Tom Coburn (OK-R) blocked the Senate from voting on the bill, arguing that to do so would add to the deficit. Democrats argued that the measure qualified as emergency spending and revenue sourcing could be dealt with later.
As a result of the entire legislation being held up and the subsequent expiration of NFIP, thousands of home sale closings have been canceled or postponed in the past two weeks as home buyers feared buying homes without the insurance policy.
The impact on the already fragile housing market is too early to be understood but experts say it is unlikely to be positive. The National Association of Realtors estimated that each day the program is dormant, 1,400 closings are adversely hit.
The move has thrown the beleaguered real estate industry into crisis mode, said Lucien Savant, spokesman for the National Association of Realtors.
"When Congress returns we will be waiting on the steps for them," he said.
Freddie Mac and the Federal Emergency Management Agency have all issued statements saying that closings should go through and that flood insurance approval would be granted after the program is re-authorized. But that has not assuaged many buyer's attorneys, who are reluctant to assume responsibility, in case the program is altered, and have counseled buyers to wait.