Reauthorization of National Flood Insurance Program should be top priority during the lame duck
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The Senate and House return to Washington this week needing to address various pressing legislative matters over the remaining weeks of 2018.

In this lame duck session, the National Association of Realtors, along with Realtors across the country, believe that Congress must prioritize reauthorization of the National Flood Insurance Program, which expires at the end of this month. Every passing deadline and failure to reauthorize and reform the program for good introduces needless uncertainty and flood risk for small businesses and homeowners in 22,000 communities across the country.

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Flooding is the most common disaster in the United States, one that affects Americans in communities both coastal and inland every year. Extreme flooding events like those that have impacted Florida, Texas, North Carolina and the Ohio River Valley since 2017 seem to be increasing in frequency, and have only exacerbated the financial problems facing the NFIP. Still, the program has been renewed 42 times since 1998, with seven short-term extensions coming in the past year alone.

NAR has been engaging FEMA officials regarding major reforms it is planning for the program heading into 2019, including proposals to encourage the development of private flood insurance and inject rate fairness to NFIP premium formulas, which could be unveiled sometime next spring.

In addition, Realtors continue to support meaningful reform proposals such as the 21st Century Flood Reform Act, including addressing regulatory obstacles to a private flood insurance market, strengthening flood mapping and mitigation, and addressing repeatedly flooding properties, which account for 2 percent of NFIP policies but 25 percent of claim payments.

Perhaps most importantly, Realtors believe that reforms should better align rates to risk, particularly for inland and lower-value properties. We hold, however, that any rate increases should be fair and gradually phased in so property owners have more time to adjust to and access mitigation options.

While the 21st Century Flood Reform Act has stalled in the 115th Congress, the legislation presents a broad, bipartisan framework and opportunity for the Senate and House to set the stage for responsible, long-term reauthorization as the Nov. 30 deadline approaches, and as we head into the 116th Congress.

As the individuals most intimately involved in millions of property sale transactions every year, Realtors have and will continue to stand firm in our support of the NFIP’s ability to protect current and future generations of U.S. property owners. But we recognize the NFIP as it is currently structured is not financially sustainable over the long run. According to the Congressional Budget Office, the program is not charging enough in premiums to cover expected claims in catastrophic loss years, and has already borrowed over $30 billion from taxpayers to make up the difference.

With the challenges facing the program, reforms remain critical, as the NFIP provides up to hundreds of thousands of dollars of flood insurance coverage where required for a federally backed mortgage. It also provides an alternative to taxpayer-funded disaster assistance, which averages $5,500 per household but more often means an SBA loan that must be repaid with any underlying mortgage.

While there is a considerable and growing market for private flood insurance, for many, the NFIP continues to be the primary source of asset protection against flooding, and it must be preserved.

Ultimately, NAR recognizes the protections provided by the NFIP will vanish if the program remains on its current path. Preservation of the American Dream for millions of Americans living in both coastal and inland communities depend on the program’s financial health and longevity. That’s why Realtors will continue fighting for sustainable, long-term reforms through 2018 and as a new Congress reconvenes in January.

John Smaby, is a Realtor® from Edina, Minn., and the 2019 President of the National Association of Realtors®. A second-generation Realtor®, John has been in the industry for nearly 40 years. He is a broker at Edina Realty, where he specializes in residential real estate.