WASHINGTON, DC – With House Republicans threatening to force a federal government shutdown and prevent a stopgap funding extension, homebuyers and sellers could be forced to scramble and move up or push back closing dates in an already fraught housing market.

U.S. Senator Jack Reed is urging a timely reauthorization of the National Flood Insurance Program (NFIP), which will expire on September 30th unless Congress takes action to prevent an unnecessary lapse.

The NFIP makes federally-backed flood insurance available in those states and communities that agree to adopt and enforce flood-plain management ordinances to reduce future flood damage. The program provides access to flood insurance to property owners, renters, and businesses.

According to the Federal Emergency Management Agency (FEMA), the NFIP will not be able to issue new flood insurance policies during a funding lapse. 

“If House Republicans refuse to renew the NFIP and follow through on their threats to force a federal shutdown, it could negatively impact the housing market nationwide.  FEMA would be unable to issue new flood insurance policies, or renew existing ones, until the government resumes operating.  That could prove to be a disaster for folks buying a new home in the midst of Hurricane season,” said Senator Reed.  “Congress needs to help working families protect their homes and make communities more resilient and flood resistant.”

The NFIP was originally established in 1968 and is the principal provider of flood insurance across the United States.  Today, there are over 4.7 million NFIP policyholders nationwide, including about 15,000 policies in force in Rhode Island.

The last time the program expired, 1,300 home sales per day were disrupted across the country, according to the National Association of Realtors.

Just one inch of floodwater can cause up to $25,000 in damage, according to FEMA.

Senator Reed says that in case of a flood disaster during a government shutdown, federal funding would still be available to pay out flood claims of current NFIP policyholders.  However, if House Republicans force a federal government shutdown it would halt renewals on existing policies as well as the issuance of any new policies, potentially disrupting thousands of home sale closings.

Reed says he is working with colleagues on both sides of the aisle on a bipartisan proposal that would reauthorize the program for five years – providing greater stability for homeowners, small business owners, and the real estate market. It will also implement a series of sweeping reforms to reduce costs, make generational investments in communities to reduce flood risk, and establish a fairer claims process for policyholders.

Earlier this month, at a recent hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Reed raised the consequences of NFIP funding lapsing and stressed the importance of reducing flood risks by taking proactive steps like restoring flood plans and boosting resilience.

Since 2017, NFIP has had 25 short-term reauthorizations, with the most recent coming last December.

“Millions of Americans rely on the National Flood Insurance program.  If House Republicans force it to lapse and then shut the government down, they will be leaving many families high and dry.  We should prevent an avoidable disaster and pass a short-term fix without further delay,” said Senator Reed.