The American Bankers Association and its insurance subsidiary are urging lawmakers to immediately reauthorize the National Flood Insurance Program, arguing that a failure to do so would only place further stress on the nation's housing sector.
In a letter to a Senate subcommittee that held a hearing on flood insurance Wednesday, the trade group said that millions of property owners in roughly 21,000 cities and towns depend on the 44-year-old government-backed program as their main source of protection against flooding.
"Without flood insurance, many residential and commercial real estate transactions across the country will come to a stop, as federally backed mortgage loans cannot legally be secured without this critical protection," the letter said.
The flood insurance program has been reauthorized only a temporary basis in recent years and it is set to expire again May 31. The House last year passed a bipartisan bill to authorize the program for five years and the Senate Banking Committee has unanimously approved a similar measure, but the full Senate has yet to vote on the legislation.
In 2010, the program received $1.2 billion in funding, which covered the policies of 5.6 million homeowners.
The ABA and the American Bankers Insurance Association support a long-term authorization as well to avoid the inevitable lapses that come with repeated short-term extensions.
"We are about to enter hurricane season, and America cannot afford a lapse of the program," the ABA said. "Failure to reauthorize [the program] would further stress already struggling real estate markets, potentially cost the government billions of dollars in uncompensated relief efforts, and put millions of consumers at risk."