Posted on 06 Jul 2010
President Barak Obama today signed an extension to the National Flood Insurance Program, extending the lifeline to owners of properties in flood-prone areas to Sept. 30.
The extension allows people with properties in flood areas and those seeking to close on properties in flood-prone areas to transact sales on those properties. No claims could be filed against NFIP policies and no new NFIP policies could be written since the program’s expiration May 31.
The program, which serves about 5.5 million property owners in the U.S., received a retroactive extension, meaning any claims filed after May 31 for flood damage will be honored.
During the lapse, some property buyers in flood areas who had locked in interest rates or were taking advantage of federal closing cost rebates found themselves unable to close, meaning they may have lost the locked in interest rate and the rebate opportunity.
The lapse, one of several in the last year, came as the hurricane season began in the U.S. That season runs from June 1 to Nov. 30.
The insurance industry continues to voice its frustration at short-term extensions and the lapses, saying it creates uncertainty about the program. A bill to extend the program for five years is before Congress, but has not been acted on.