While Congress is expected to pass some kind of extension soon, even in light of another hiccup on Wednesday in the extension of the program (along with the jobless benefits legislation), those looking to buy homes in high-risk flood areas could turn to Fannie Mae and Freddie Mac on their policies, according to the Times blog.
This month, Fannie Mae, which provides financing to the mortgage market by buying the loans from lenders, sent a letter that basically states “to help ensure the continued availability of mortgage financing to borrowers seeking to purchase properties located in Special Flood Hazard Areas,” it would buy loans secured by properties in those areas, even if there was no active flood insurance policy as long as certain conditions were met.
For home buyers, the requirements include evidence of a completed application for flood insurance and evidence reflecting payment of the initial premium, which you could pay without the program being effective, or the assignment of an existing flood insurance policy from the property seller to the purchaser. Fannie Mae’s policy, which also has other requirements for lenders, applies to mortgage loans closed and delivered to Fannie Mae during the suspension period.
Freddie Mac, a fellow mortgage buyer, recently outlined similar requirements for borrowers during the suspension of the National Flood Insurance Program.
These requirements generally line up with what others are doing, including Bank of America, which said it would still accept mortgage applications for homes in designated flood regions as long as applicants provided proof that they had applied for the program.