Flood insurance bill advances despite battle.

Acting despite herculean efforts by the real estate and homebuilding industries, the House Banking Committee Nov. 4 passed legislation mandating increased availability and regulation of flood insurance.

But passage of the legislation this year by the full Congress is still unlikely, given the fact that the Senate Banking Committee has not acted on similar legislation, and less than three weeks remain before Congress' scheduled adjournment date. Such a delay into next year would give the real estate and homebuilding industry additional time to reduce the impact of the bill on their businesses. Congress has not succeeded in dealing, even though it began trying in 1989.

Realtor and builder sought to kill the bill during the markup Nov. 4 by having their supporter offer a slew of amendments and demand quarum calls so that managers of the bill would have to round up tired supporter continually. But the effort failed ant the bill ultimatley Pama 40-10.

The Senate Banking Committee has not acted on a similar bill because of difficulty in reaching a compromise on whether lenders should be required to have flood insurance in areas prone to flooding. Markups have been postponed the last two weeks because of the conflict. But a final version is expected to be passed soon, industry lobbyist said.

The homebuilders and real estate industry are balking because of provisions that set rigid requirements for construction of homes in flood-prone areas.

They sought to delay action by having their supporters introduce a number of amendments and other wise slow down the process, but the effort failed.

The legislation as passed by the full House Banking Committee reduces some documentation requirements for lenders by adding language that says lenders have to escrow for flood insurance only if required to escrow for other property/ casualty insurance on mortgaged property.

Banking industry trade groups agreed to the bill after Rep. Joseph Kennedy, D-Mass., floor manager of the legislation. agreed to a package of amendments that reduced lender concerns.

Regulators also have the authority, under the legislation, to mandate escrowing of all insurance if there is a pattern of abuse by a lender. The legislation provides respite for Freddie Mac and Fannie Mae by saying they will be required to comply with the regulation only if a General Accounting Office study determines that the agencies don't require flood insurance in high risk areas.

The bill requires property buyers in flood-prone areas to purchase flood insurance when getting a mortgage, allows regulators to fine lenders who do not require borrowers to purchase flood insurance - but allows lenders to "force place" insurance if there is unwillingness by underwriters to provide coverage.

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