National flood insurance program on hold during government shutdown

HARLINGEN, Texas (ValleyCentral) — The government shutdown could soon hit home for Rio Grande Valley residents, literally where they live. The National Flood Insurance Program is unable to write new policies or renew existing ones while the government is shut down.

Current policyholders will still receive payment if the area experiences a severe rain event. The only current restrictions are on new businesses. Minerva Simpson, Co-Branch Manager at Fairway Independent Mortgage Corporation, said the policies can not be issued because 'The staff at the department are most likely not going to be there, so there’s no one there to be able to process those requests.'

Simpson's company is part of a national company with an office in Harlingen. She says the national office has been monitoring the situation.

"Our credit policy department, through our companies, sent out an FAQ letting us know of the impacts that the shutdown, the federal shutdown, can have on our industry."

Maps from the Federal Emergency Management Agency designate flood zones. There are a dozen different risk categories that geographic areas can fall into, ranging from low to high risk. Lenders use that information to create the Flood Insurance Rate Map (FIRM).

Simpson said if prospective homeowners are found to be in a federally declared flood zone, "then you won’t be able to complete the process.”

She said these requirements do not impact large sections of the Valley. Even with flooding like the region experienced this past spring, it does not mean homeowners fall within a designated flood zone.

“I know that there are a lot of areas that have flooded that are not in this mandatory flood zone, where mortgages will be required to have that. For areas such as Willacy County, there are a lot of areas in Raymondville, if you’re along the coastal lines, a lot of times that insurance is required by your lender.”

Simpson said for anyone who finds themself in this spot, needing flood insurance but unable to get it through the federal program while the government is shut down, there are two options.

The first option is to try and wait for the shutdown to end soon. Home sellers are also willing and able to delay the purchase.

She said there are also options in the private market for getting flood insurance. Local agents can write these policies. However, with all insurance products, she said the terms and cost will vary.

Simpson is not worried about flood insurance going back to normal and clearing out any backlogs when the government does reopen. She said at this point, the process is very automated, so technology can fill the gaps when consumers face a situation like this.