In a win for the Big "I," the Federal Housing Administration proposed a new rule that would allow consumers to purchase private flood insurance.
Earlier this week, the Federal Housing Administration (FHA) proposed a new rule for private flood insurance. The proposal would allow consumers to purchase a private flood insurance option instead of insurance through the National Flood Insurance Program (NFIP) when flood insurance is required by the FHA.
This new proposal is a win for the Big “I" because it has spent significant time over the last couple of years advocating for the FHA to accept private flood policies, including numerous letters and meetings with the FHA.
Specifically, the proposed changes would allow lenders to begin accepting private flood insurance policies for single-family insured loans for homes located in Federal Emergency Management Agency-designated Special Flood Hazard Areas, consistent with similar provisions in use by other federal agencies.
“Our proposal would expand the options for obtaining flood insurance, rather than continuing to lock in borrowers to one federal option without any ability to comparison shop," says commissioner Dana Wade, assistant secretary for housing, federal housing commissioner. “We are also proposing important safeguards that will help protect borrowers, so their homes will have flood insurance coverage at a level at or above the level available through the National Flood Insurance Program."
The proposed rule will be published in the Federal Register in the coming days and will provide for a 60-day public comment period following publication. Given the Big “I'" support for allowing the FHA to accept private flood insurance, the Big “I" plans to submit comments. As this is a proposal only, FHA's current flood insurance policies remain unchanged at this time, including the requirement that minimum flood insurance is obtained through the NFIP.
Wyatt Stewart is Big “I" assistant vice president of federal government affairs.