Flood Insurance Void WorriesRegulators

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WASHINGTON - (09/20/05) -- Large swaths of the propertydestroyed or damaged by flooding from Hurricane Katrina were notcovered by flood insurance, leaving property owners, lenders andregulators with big post-storm headaches and wondering whether thefederal government will step in with financial aid. "This is a hugeproblem," NCUA Chairman JoAnn Johnson told NAFCU's annualCongressional Caucus Monday. "Many of these properties lie outsidethe floodplain and they don't have flood insurance. I knowPresident Bush is aware of this. Hopefully, some federal assistancewill come along." Under federal law all properties that lie withinthe delineated floodplain are required to be insured under theNational Flood Insurance Plan. But large portions of New Orleansand other areas flooded by the Hurricane were not inside thefloodplain, so did not require flood insurance. As a result,thousands of mortgages that were destroyed by flooding areuninsured. Congress is discussing an emergency appropriation tocover uninsured properties.

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