Iowa Homeowners Left Out in the Rain

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The Federal government in Washington always appears busy creating, arguing and passing all types of legislation. According to politicians, they work extremely long hours just for us, the taxpayers. You may have trouble convincing Iowa homeowners of that, however. Particularly those in Iowa who want to purchase flood insurance.

Homebuyers in high-risk flood areas that take out federally insured mortgages are required by their lender to buy flood insurance.

But the National Flood Insurance Program, who issues the policies, expired May 31 of this year without congressional renewal and they cannot accept any new policies. In the event you may think the program expiring was simply an oversight, it was at least the second lapse in the program this year alone.

FEMA, the Federal Emergency Management Agency, who manages the flood insurance program, issued a bulletin explaining the situation. As they noted, until Congress reauthorizes the program, loan closings from June 1 will be delayed or potentially halt entirely.

At this point, the impact on real estate sales in Iowa has been minimal. However, an extended lapse in authorization of the flood insurance program could cause more loan closings to fall through.

If you are trying to buy a home, the effect could be grave. In addition, if you have been trying to sell your home only to have a sale cancelled by the program lapse, you probably are not happy either.

"I don't know why Congress hasn't done anything," said Russ Nading, president of the Cedar Rapids Area Association of Realtors. He has talked to two Iowa senators and a U.S. representative and they all expressed support for extending the program.

It is ironic that the government requires flood insurance for certain mortgages but has allowed the program to lapse. FEMA says "most" of the 5.5 million flood insurance policyholders are not affected.

However, during this time the program will not be able to increase coverage on existing policies, issue renewal policies or make new policies.

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