On Monday November 7th, Federal regulators issued a long-overdue rule on what private flood insurance policies will be acceptable for federal flood coverage requirements.
The rules are required as part of the National Flood Insurance Program (NFIP) reauthorization passed in 2012. Among other things, the bill sought ways to foster a private market that would complement the government-backed program and lessen taxpayer exposure to flood risk across the country. (READ MORE)
It required numerous federal agencies, such as the Federal Reserve and the Federal Deposit Insurance Commission (FDIC) to issue guidance to the lending community on what private flood policies were acceptable to meet existing federal flood coverage requirements for at-risk properties.
As currently drafted, the rule clarifies that lenders have some discretion to accept private flood insurance policies, even if they don't meet the exact definition of "private flood insurance" in the Biggert-Waters Flood Insurance Reform Act from 2012. NMHC/NAA now has an opportunity to provide comments before the rule is finalized in early 2017.
NMHC/NAA, as recently as mid-October, pressed Congressional leaders for this very guidance. We have long called for clarification on what lenders can accept in lieu of NFIP policies. While we strongly support the NFIP and urge Congress to reauthorize the program in 2017, we believe that a more robust private market will benefit multifamily property owners by not only protecting their property investment, but by also helping to manage the increasing costs of providing housing.
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