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How Flood Insurance is Impacting Transactions
LOUISIANA REALTORS • Dec 27, 2018
Updated on 12/28/2018…
In a critical win for home sales,FEMA reverses a controversial ruling released earlier this week. The agency will resume issuing and renewing flood insurance policies without interruption to the transaction.
"FEMA and the Administration deserve credit for hearing our concerns and acting swiftly
to address them," says National Association of REALTORS®' President John Smaby. "This new decision means thousands of home sale transactions in communities across the country can go forward without interruption, as Congress intended when it renewed the flood insurance program earlier this week."
"This would not have been possible without the constant communication with Louisiana's congressional delegation and the hard work of NAR regulatory and lobbying staff," said Louisiana REALTORS® CEO Norman Morris.
NAR, along with other organizations, including the Property Casualty Insurers Association of America and the Independent Insurance Agents & Brokers of America, urged policy makers to reevaluate the decision. Congress also expressed their concern as well.
"We thank our REALTOR® members who got engaged and responded with stories about their clients. This week's activities demonstrated how the REALTOR® Party protects your real estate business, mobilizes its efforts, and its effectiveness in protecting homeownership!." said Morris.
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WHAT IS GOING ON WITH FLOOD INSURANCE?
On December 26, 2018, the Federal Emergency Management Agency (FEMA) issued new guidance instructing insurers not to sell or renew flood insurance policies during the partial government shutdown.
<<Read the information from NAR>>
HOW DOES THIS AFFECT THE REAL ESTATE BUSINESS AND MY CLIENTS?
Transactions involving a buyer who has not
obtained required flood insurance will not be able to close until FEMA allows insurers to sell flood insurance policies.
Those who obtained flood insurance on or after 12:00 a.m., December 22, 2018, may also not be able to proceed with their closings pending a determination by FEMA.
IF THE NFIP WAS EXTENDED THROUGH MAY 2019, WHAT GIVES FEMA THE ABILITY TO DO THIS ?
FEMA’s decision was made under the Antideficiency Act, which generally prohibits federal expenditures/obligations in excess or advance of appropriations, except in cases of “emergencies involving … protection of property.”
WHAT IS THE NATIONAL ASSOCIATION OF REALTORS®’ POSITION ON THIS?
NAR believes FEMA’S action is contrary to the Congressional reauthorization and intent.
NFIP is funded by premiums paid by policyholders, not appropriations so the Antideficiency Act should not apply. NAR has provided FEMA with research that shows 40,000 home sales per month are at stake, which NAR believes would qualify for an exception under the Antideficiency Act and allowing NFIP to resume the sale of flood insurance policies.
WHAT CAN I DO TO HELP CONVINCE FEMA TO RESUME THE SALE OF FLOOD INSURANCE POLICIES?
NAR is looking for directly affected home buyers
who can tell a compelling story of how FEMA’s decision is harming real, ordinary people and families
who most Americans can relate to on this issue.
NAR may share these stories with FEMA or Congress
to demonstrate the disruptive affect this decision has on the real estate market and ordinary citizens. NAR may also ask the buyer to be a media spokesperson for the issue if their story is what NAR is seeking to convey about the disruption FEMA’s decision is causing.
Louisiana REALTORS® is seeking your help to identify any of your clients who may have a compelling story that they are willing to share about the harmful impact of FEMA’s decision to stop selling flood insurance policies.
Please respond to info@larealtors.org
with your name, your client's name, phone number, and brief description of their situation. We will call you first and then contact them to see if your client's situation fits within the parameters NAR is seeking. If so, with their permission we will share their story and contact information with NAR.
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A Message from Ken Fears, NAR Director of Conventional Finance and Valuation Policy
Since REALTORS® are essential in enabling housing access for all people, regardless of background or attributes, they view adherence to the FHA as both a legal and moral responsibility.
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