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Homeowners across the Houston and Galveston areas who want to buy flood insurance or renew their policies have been stuck in limbo since Congress let the National Flood Insurance Program lapse nearly four weeks ago.
The issue has become particularly troubling because hurricane season has begun, and meteorologists are monitoring a tropical disturbance that could enter the Gulf of Mexico in the early to middle part of next week.
"With a predicted busy storm season upon us, it's essential that Texans living in flood plains have access to this insurance to protect themselves against losses from flood damage," Sen. John Cornyn, R-Texas, said.
What's more, thousands of home closings have been delayed nationwide as some lenders have refused to fund loans on properties requiring flood insurance.
Since the program expired May 31, consumers have been unable to buy or increase their flood insurance coverage.
While the program has fallen through the cracks already twice this year — only to be reinstated within a few days and a couple weeks, respectively - this time around it coincides with hurricane season and the end of the federal tax credit.
"It's really killing us," said Galveston real estate agent Gary Schero, who has six clients waiting to close on homes but can't because the borrowers can't get flood insurance.
One of those is Rosmond Phormahlen, who's trying to buy a three-bedroom house on the island's Fish Village neighborhood.
Her lender won't fund the loan without flood insurance, and now she's worried she might not be able to close in time to qualify for the home buyer tax credit - the main reason she decided to buy the house. The closing deadline is June 30, though there is a proposal in Congress to extend it.
"We finally made it through the whole lending process, only not to be able to close because of flood insurance," Phormahlen said.
The National Flood Insurance Program makes federally backed flood insurance available to homeowners and renters in nearly 20,000 communities across the U.S.
Most flood insurance is acquired through the national program. Federally regulated lenders require borrowers whose properties are in high-risk flood zones to carry the insurance. Private insurance companies make up just a small share of the market.
Consumers with existing policies will not be affected and therefore will not see any interruption in their payments, said Rachel Racusen, a spokeswoman for the Federal Emergency Management Agency. A unit of FEMA manages the program.
Homeowners who want to purchase new policies or need to renew their policies, however, won't be able to do so until Congress renews the program.
Garry Kaufman, president of Galveston Insurance Associates, advises consumers to send their renewal payments and paperwork into their insurance companies, as Congress is expected to renew the program retroactively.
If the program is not retroactive, consumers could be out of luck if they don't have a policy in place or weren't able to renew their coverage before the program lapsed.
FEMA said anyone with questions about their policies should contact their insurance agent.
It has been estimated that for each day the program remains in limbo, approximately 1,400 closings for home purchases must be delayed, according to the National Association of Mutual Insurance Companies in Washington.
Such delays can add significant costs to buyers and sellers, and threaten the housing economy, the group said.
The legislation to extend the program was attached to bills dealing with jobless benefits and business tax breaks that failed to pass.
A separate bill to extend the program retroactively through the end of September was approved by the House earlier this week. The legislation was later introduced in the Senate but it did not pass.
