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The Week Ahead: Senate Examines Reauthorization of the National Flood Insurance Program

in Daily Dose, Data, Default Servicing, Featured, Government, Government, Lending and Originations, Loss Mitigation, Market Trends, Migration, News, Real Estate, Servicing, Traditional January 19, 2024 446 Views

On Thursday, January 25 at 9:00 a.m. Central, the Senate Banking Committee will present the full Committee hybrid hearing, "Reauthorization of the National Flood Insurance Program: Local Perspectives on Challenges and Solutions" featuring guest speaker Michael Hecht, President & CEO, Greater New Orleans Inc. delivering testimony.

Congress must periodically renew the National Flood Insurance Program's (NFIP) statutory authority to sell flood insurance and borrow funds from the U.S. Treasury to conduct the program. Since September 2017, there have been a series of short-term extensions and three brief lapses in the program’s authority to sell and renew policies. The NFIP can still process and pay claims on flood insurance policies as long as funds are available. FEMA and Congress have never failed to honor the NFIP’s contracts with policyholders.

On Nov. 16, 2023, President Joe Biden signed legislation passed by Congress that extends the NFIP’s authorization to Feb. 2, 2024. Congress must now reauthorize the NFIP by no later than 11:59 p.m. on Feb. 2, 2024, to avoid a lapse in authority to sell flood insurance and borrow funds.

FEMA continues to advocate for a multi-year reauthorization of the NFIP, and remains ready to support Congress to take bold steps on meaningful reforms that increase the number of Americans covered by insurance by making insurance more affordable; build climate resilience; reduce risk, losses, and disaster suffering; and strengthen the NFIP’s financial framework.

During past periods when Congress allowed the NFIP’s authorization to lapse, or extended it for short periods of time, uncertainty about flood insurance availability impacted property owners’ ability to buy and sell homes in special flood hazard areas. The Flood Disaster Protection Act of 1973 prohibits a lender from making, increasing, extending, or renewing a federally backed mortgage loan for a property located in special flood hazard areas unless the property is covered by flood insurance.

There are approximately six million homes located in special flood hazard areas nationwide, and the National Association of Realtors (NAR) estimates that should a lapse in the NFIP’s authorization occur, it could threaten 1,300 property sales each day.

Testifying before the Senate Banking Committee on January 25 will be Michael Hecht, who serves as President and CEO of Greater New Orleans Inc. (GNO), the economic development agency for southeast Louisiana. GNO's mission is to create a region with a thriving economy and an excellent quality of life. Under Hecht's leadership, GNO has been named the “Top Economic Development Organization in the United States” by the International Economic Development Council.

Before coming to GNO, Michael led the quarter-billion-dollar Katrina Small Business Recovery Program for the State. Previous to coming home to Louisiana, Hecht worked for Mayor Michael Bloomberg in New York City, running the post-9/11 small business program. Michael's entrepreneurial experience includes co-founding a conglomerate of restaurant ventures, including “Foreign Cinema,” named Restaurant of the Year 2000 in San Francisco. He began his career as a strategic management consultant in the U.S., Canada, Europe, and Australia.

Hecht has been recognized as “One of the 10 People Who Made a Difference in the South,” “One of the 20 Business ‘Icons’ of the Tricentennial,” and “2018 CEO of the Year.”

Click here for more information or to register for the Senate Banking Committee hearing, "Reauthorization of the National Flood Insurance Program: Local Perspectives on Challenges and Solutions."

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About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.
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