Fannie Mae and NAR at odds over…

Fannie also wants FEMA and perhaps Congress to create uniform flood risk disclosure rules. NAR, meanwhile, no longer wants to see states excluded from the federal government’s flood insurance program due to not meeting FEMA standards.

The differences emerged as FEMA seeks public input on revisiting the National Flood Insurance Program, or NFIP, the federally administered program to make flood insurance and federal relief available to homeowners. NFIP has been around since 1968, and there have been periodic attempts to update it the last 20 years amid a fast-growing number of household claims.

After Hurricane Sandy in 2012, Congress increased NFIP’s borrowing limit to $30.5 billion, according to the Congressional Research Service. As of December, NFIP’s borrowing authority had dwindled to $9.9 billion, per Congress’s research arm, while still being on the hook for $2.9 billion in reinsurance payments.

NFIP provides over 5 million policies, according to CRS, in jurisdictions that meet federal criteria on building, design standards, and risk index. 

Despite the NFIP servicing a significant chunk of homeowners, the program has struggled with its financial wherewithal, partially due to the fact that Congress requires NFIP to charge discounted premium rates to policyholders. 

A report published by the Government Accountability Office in July 2021, found that as of August 2020, FEMA’s debt was $20.5 billion, despite Congress having canceled $16 billion in debt in October 2017.

Both NAR and Fannie Mae seek a policy that requires more disclosure – especially amid a real estate or mortgage transaction – about a home’s flood history and future risk assessment. 

But the key ideological difference is that Fannie Mae wants the federal government to establish laws mandating flood-risk disclosures at the time of the property sale. The GSE would like either Congress or FEMA to standardize a way in which more FEMA flood data is published, and available for consumers.

NAR, meanwhile, believes that state and local government should set requirements. As for mandatory disclosure, the trade group sees a work around: Simply allow prospective homebuyers to see a home’s Comprehensive Loss Underwriting Exchange, or CLUE report, which would require a Federal Privacy Act exception. 

The public comment period ended Thursday. Unclear is FEMA’s timetable to adopt recommendations, but a spokesperson told HousingWire that FEMA will review all of the comments and publish a summary “in the future.”


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