Magazine article Mortgage Banking

Senate Banking Committee Examines Flood Insurance Overhaul

Magazine article Mortgage Banking

Senate Banking Committee Examines Flood Insurance Overhaul

Article excerpt

Congress must move quickly to fulfill its obligations to hurricane-affected homeowners in the Gulf Coast region by increasing the borrowing authority of the National Flood Insurance Program (NFIP)--only then should lawmakers consider broader range NFIP reform, the Mortgage Bankers Association's top officer told members of the Senate Banking Committee in February.

In her testimony before the committee, MBA Chairman Regina M. Lowrie, CMB, advised members to resist a "quick fix" reform to NFIP, as there are too many unknowns to consider without further study.

"Without a reliable and uninterrupted source of flood insurance, we believe mortgage credit would, at best, be more expensive, or at worst, unavailable in many markets," Lowrie testified. "At the same time, overly expansive extension of the flood insurance requirements could have unintended consequences, increasing the cost of homeownership, affordable housing and occupancy costs for businesses. It could also increase delinquencies and foreclosures, increase business failures and reduce property values."

Holding the second in what is expected to be a series of hearings on flood-insurance reform, Senate Banking Committee Chairman Richard Shelby (R-Alabama) repeated his declaration that the NFIP program is "bankrupt" and in need of major reform.

"Under the present structure, assuming no major floods, it would take FEMA [the Federal Emergency Management Agency] decades or more to repay the U. …

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