Federal flood insurance program ends Dec. 31
No new policies will be issued after that date

Congress, in its haste to get out of Dodge during the rump session, failed to renew the legislation authorizing the federal floor insurance program.

That means that people buying or building homes in the flood plain won't be able to get mortgages until the program is reinstated.  Loan companies make flood insurance a requirement for obtaining a loan.

"If you live in a flood zone," one real estate agent said, "you'd better check your policy and make sure it is up to date and in force before the end of the year.

"Although we expect early action by Congress next year, when it comes to politicians, nothing can be taken for granted."

The Federal Emergency Management Agency (FEMA) which oversees the program, will be notifying agents around the country of the dilemma in the new couple weeks.

The failure means that anyone buying, building, or living in a flood plain will not be able to obtain required flood insurance after Dec. 31.

Those who have flood insurance or need it, can purchase it now, as long as the premium payments for renewals, new applications or endorsements with accompanying premium payments are received on or before Dec. 31.

Anthony S. Lowe, administrator of the Federal Insurance and Mitigation Administration of FEMA, in a Nov. 25 memo said that renewals, applications, or premiums received after Dec. 31 should be held the National Flood Insurance Program servicing agent.

He anticipates that Congress will act quickly to renew the program quickly after it reconvenes about mid-January.  He also expects that when Congress does renew the program that it will be made retroactive to Jan. 1, 2003.

Lowe said that claims on policies issued or renewed prior to Dec. 31 can be adjusted and paid even if the claim and/or payment occurs before Congress acts.

Loan servicing agents have been advised to make sure that premium renewals are mailed in advance of the new year so that policies continue in force and that those who live in special flood hazard areas (or who are buying homes in these areas) should try to purchase flood insurance before the end of the year.

Property owners who must close after the first of the year and will not be able to purchase flood insurance in advance may be forced to seek private flood insurance policies, if available.

Lenders may delay closings if flood insurance is not available. Worse yet, lenders may be required
to force place private policies if a property owner lets a federal flood policy lapse.