The torrential rains sweeping through the Midwest are spurring new debate on Capitol Hill about the nation's flood insurance program and may lead to tougher requirements, including a provision allowing lenders to force-place coverage after loan origination.

The main focus of attention is H.R. 62, the National Flood Insurance, Mitigation and Erosion Management Act of 1993. introduced by Rep. Doug Bereuter, R-Neb. But Fannie Mae and Freddie Mac are uneasy about the lack of a provision within the bill. They want the legislative - or any future legislation - to require lenders to "force-place," or mandate, coverage in locations remapped as flood hazard areas after loan origination.

The absence of the provision may prove costly, should flooding occur to consumers who don't know their property has been reclassified or simply aren't compelled to purchase the insurance. Many homeowners in the waterlogged Midwest may fall into this category. According to the Federal Emergency Management Agency, only 10% of those in the region are required to have coverage actually do.

The Bereuter bill, which does require "force-place" insurance as a loan origination requirement, was introduced in January. It is before the House Banking Subcommittee on Consumer Credit and Insurance. Two similar bills from Sen. John Kerrey, D-Mass., and Rep. Joseph Kennedy, D-Mass., are expected to be introduced soon, but no details were available on whether they would include that provision.

"The Bereuter bill requires insurance for people in flood hazard areas. and we definitely support that," said Albert LeQuang, national policy administrator for Freddie Mac. "One of the things we now require - which needs to be codified in the Bereuter and Kerrey bills - is that we require flood insurance in an area that is remapped after loan origination.

Fannie Mae said a would push for inclusion of that provision in any new legislation.

It's a risk the homeowner should be aware of and able to get adequate protection for," said Anita Champ, assistant director of loan servicing at Fannie Mae. "It shouldn't matter when [the property] was designated, there's still a risk."

While those organizations are interested with the remapping provision, they, along with the Mortgage Bankers Association of America. would also like to see the "force-place" issue take effect

"The[lender's] interest is in protecting the risk to the property," said Brian Chappelle, staff vice president of the Mortgage Bankers Association of America. But consumers are concerned that flood insurance will be charged for areas where chances of a flood are one in a million. We'd like to see [requirements] for us to do that so we're not susceptible to lawsuits because we collected in an area that shouldn't have been."

Chappelle, citing the disaster in the Midwest as an example, suggested that a requirement would clear uncertainty regarding who needs coverage.

"This is a one-in-a-hundred years flood," he said. "If [homeowners] knew this was coming. they naturally would have bought the insurance. When I asked our members why people don't have flood insurance, they said Kwasa combination of the cost to the consumer and their impression that they In far enough away from what they perceived as the hazard areas."

That impression may end up being costly to many. FEMA reports that 800 claims have already been filed to NFIP and estimates that about 18,000 NFIP policies will be affected by the Midwest floodings. Thousands of more claims will be handled by commercial agencies. However, despite these coverages, the agency said that most homeowners aren't insured.

To eliminate these and other problems, Bereuter's legislation covers a range of issues aimed at improving the program by weeding out problems that have caused losses in the past.

"The fund is about broke," said a Bereuter staff spokesman, "and the market penetration of these policies is at a minimum. Basically, the bill covers four points which we hope will improve the system. It authorizes statute creation of a community rating system for communities participating in the National Flood Insurance Program. establishes a mitigation program to reduce repetitive losses that are draining the fund. ..."

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