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Regulators Issue Guidance to Allow Loan Closings During NFIP Lapse
Six of the nation's largest lending authorities (FEMA, Fannie Mae, FHA, Freddie Mac, Office of Thrift Supervision and the Federal Reserve) have issued guidance to administer the federal flood insurance regulations during the current National Flood Insurance Program (NFIP) lapse in authority.
Although each lending authority notes considerations, the consensus is, in most
cases, loan closings may still occur during the NFIP lapse with verification of the submission of a NFIP flood policy application and premium payment submission to the insurance provider.
Lenders should follow all normal flood risk evaluations prior to closing and establish follow up practices to monitor full compliance upon the re-authorization of the NFIP program.
Lenders should become familiar with and follow the specific guidance offered by their lending authority.
When Congress returns on April 12, NAR will encourage them to act swiftly to reauthorize and extend the NFIP, and insist that the reauthorization should be made retroactive to March 28, 2010, so that any properties that are flooded during this lapse will be covered by the program.
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