WASHINGTON – The National Association of Realtors® applauded steps taken this week by the Federal Housing Administration to make more private flood insurance options available to U.S. consumers.
The FHA proposal would allow private insurance to be used provided it meets the agency’s definition, harmonizing with recent federal laws and pro-consumer industry practices.
Current FHA regulations, established in 1999, prevent homebuyers with FHA-insured mortgages from obtaining flood insurance from any source other than the National Flood Insurance Program.
“America’s 1.4 million Realtors® are grateful to see the FHA take steps to make more private flood insurance options available to U.S. consumers,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, CA. “Outdated federal regulations have for too long prohibited lenders from accepting private flood insurance that is often more affordable and more comprehensive than NFIP policies. Although regulatory hurdles remain before this proposed rule is finalized, NAR looks forward to continuing our work alongside the FHA, HUD and President-elect Biden’s administration to make private flood insurance more readily available to American property owners.”
Since 2016, NAR has been spearheading a coalition effort to educate the administration and Congress about the importance of private flood insurance to consumers as well as the affordability and sustainability of FHA-insured products.
As part of this coalition effort, the group has secured relevant policy provisions within numerous NFIP reauthorization bills, built a broad coalition alongside other major industry groups, and provided the legal, economic, and data basis that supported FHA’s proposed policy reversal.
Earlier this year, Malta penned a letter to HUD’s Assistant Secretary for Housing, Dana Wade, underscoring NAR’s desire to see more private flood insurance options available in the marketplace.
“NAR members can provide numerous examples where the market has offered better coverage at lower costs than the NFIP, but the 1999 rule needlessly constrained consumer choice and created inequities between FHA and more conventional loan holders,” Malta wrote. “The 21-year-old rule must be updated to reflect current market realities or the FHA risks losing market share.”