Are you prepared for the NFIP expiration on Nov. 21?
AML AND COMPLIANCE NEWS |
Make sure your financial institution is prepared should the NFIP lapse as it could result in delayed loan closings
The National Flood Insurance Program (NFIP) is set to expire on Nov. 21, 2019, unless Congress extends the authorization once again. This means that Federal Emergency Management Agency will not have authority to issue new flood insurance policies, and that FEMA’s borrowing authority will be drastically reduced if the NFIP is not extended. Should FEMA’s National Flood Insurance Fund dry up, claimants would have to wait to be paid out until replenishments were made to the fund. FEMA projects that approximately 40,000 loan closings will be impacted for each month in which the NFIP is not extended. Financial institutions should evaluate loan closing policies and procedures when the properties located in a special flood hazard area are pledged as collateral to determine that processes adequately address the flood insurance requirements to avoid delays in loan closings. An alternative to obtaining flood insurance from the NFIP is to obtain a private flood insurance policy. Make sure your financial institution is prepared for the NFIP expiration by:
- Checking out the ABA’s guidance on what to do before and after a lapse in the NFIP.
- Understanding the alternatives for obtaining flood insurance and familiarizing lending personal on the private flood insurance policy requirements by reviewing the issuance of the Biggert-Waters Act final rule effective July 1, 2019, by the joint agencies.