Federal government shutdown creates a problem for closing home sales

Dec. 28--The nearly week-long government shutdown has sparked a temporary freeze in the issuance of federal flood insurance policies, jeopardizing thousands of U.S. home sales.

The Federal Emergency Management Agency, which is part of the Department of Homeland Security, announced Wednesday a halt in the issuing and renewing of federal flood insurance plans through the National Flood Insurance Program until Congress moves to end the shutdown and reset funding for agencies like the DHS.

The decision -- announced after Congress passed, and President Trump signed, an extension of the NFIP through 2019 -- was reproached by Sens. Marco Rubio, R-Florida, and Maxine Walters, D-California, who said it flew in the face of Congressional intent.

"I strongly disagree with this guidance as it incorrectly interprets congressional intent demonstrated last week with Congress passing legislation to keep the program operating until June 2019," Rubio said in a statement, adding that the federal flood insurance program is "vital" to Floridians.

On Thursday, Florida's Office of Insurance Regulation urged homeowners in the state to take advantage of private flood insurance plans instead, which it said were generally offered at similar or cheaper prices than NFIP plans.

OIR Commissioner David Altmaier said Florida's "unique geography" makes flooding a serious threat to "virtually every homeowner" in the state.

"As conversations surrounding the future of the federally administered National Flood Insurance Program [NFIP] continue, Commissioner Altmaier and Chief Financial Officer Jimmy Patronis have continued urging homeowners to purchase private flood coverage through the 29 insurers eligible to write private primary personal residential flood insurance in Florida," the agency said in a statement.

Shannon McGahan, senior vice president of governing affairs for the National Association of Realtors, called the freeze "abrupt and ill-conceived." The group estimates that FEMA's ruling will hold up tens of thousands of closings.

"Last week, Congress passed legislation to fully reauthorize the NFIP through May," McGahan said in a statement Wednesday. "However, today's surprise FEMA ruling jeopardizes tens of thousands of home sales across America, as NAR estimates up to 40,000 closings are disrupted each month that the NFIP cannot issue flood insurance policies."

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