This is an issue that should be at the top of your list if your collateral is in a flood plain (or even close to a flood plain—given that the flood designation might be out of date, such that the property no longer is simply "close" to a flood plain, but now is in the flood plain—per a current map).

Suggestions:

  • make sure that you’ve identified properties (in your collateral or servicing pool) that are in OR near a designated flood plain
  • how "old" is the flood plain map (that is associated with your property)?  (Is this a latent risk for the property, in that the "old" map is no longer correct, and in that a "new" map might put your property within a flood plain.)
  • confirm that the proper flood insurance is in place, and that the policy covers you
  • monitor the progress of this bill and this subject

Here is the MBA’s announcement on this topic, circulated earlier this week:

The House, by a voice vote yesterday, approved another temporary extension authorizing the National Flood Insurance Program, through Sept. 30.

The action came following an intense lobbying campaign by the Mortgage Bankers Association and other industry trade groups, which had expressed frustration that Congress had allowed the NFIP to expire three times this year, most recently in May. These expirations resulted in suspension of the NFIP, placing thousands of homeowners in limbo.

Disruption of the NFIP has had significant implications for the housing and commercial property industries. In a June 16 letter to Congress, MBA and other trade groups noted that 5.5 million taxpayers depend on the NFIP as their main source of protection against flooding, the most common natural disaster in the United States. Without flood insurance, no federally related mortgage loans can be made in nearly 20,000 communities nationwide.

“The frequent lapses in the NFIP program are undermining homeowner and commercial property owner confidence in this vital program,” the letter said. “Given the fragile state of residential and commercial real estate markets, Congress should take immediate action to restore confidence in the NFIP through a long-term, stand-alone extension."

The House vote fell short of an industry request for a longer-term solution; however, the extension intends that the program will continue through the end of the government’s fiscal year.

I agree with you: this topic is NOT in the top 50 bog entries read by you here at TTFL.  However, when the flood waters run through your property (which is outside of that 30 year old flood plain map), you’ll have a different appreciation of this topic.

If you have other suggestions or comments, please post them below.