During this time, FEMA cannot:
However, the NFIP will continue to assess, manage, and pay claims on existing policies.
Lenders should continue normal flood-compliance activities:
Private flood markets remain available and often provide broader coverage at competitive rates.
Yes, but with conditions. A lapse in NFIP authority does not prohibit lenders from making loans secured by improved real property in Special Flood Hazard Areas (SFHAs).
According to recent guidance from the FCA, FDIC, FRB, NCUA, and OCC: banks and credit unions may continue to close loans without flood insurance during a lapse, provided they have procedures in place to obtain flood insurance promptly once the NFIP is reauthorized or private coverage becomes available.
During the lapse, lenders remain responsible for:
A simple option is for a borrower to obtain private flood insurance where available. AFR offers private flood insurance that meets regulatory requirements and can provide a quote prior to purchase. To learn more or request a quote go to floodrates.com or contact us at either 800-995-8667 or info@afrservices.com.
Borrowers may still submit an application and premium during the lapse. These will be held in abeyance and processed once the NFIP is reauthorized. If Congress grants retroactive authority, coverage will be effective as of the application date. If not, coverage will begin no earlier than the reauthorization date — and any losses during the lapse will not be covered. Lenders should ensure borrowers clearly understand this risk and may wish to postpone closing until NFIP coverage is available.
It depends on the investor. Agencies such as Fannie Mae and Freddie Mac generally require proof of flood insurance before purchase. Lenders should confirm investor requirements and post-closing obligations before selling loans affected by the lapse.
If NFIP Servicing Agents receive a completed application and payment (or a renewal payment) before the lapse, coverage will remain in force. Claims will be honored, even if the effective date of the policy falls during the lapse period.
For applications and premiums received after a lapse begins, FEMA generally processes all applications and renewals as soon as the program is reauthorized.
When Congress reauthorizes the NFIP, it may or may not apply coverage retroactively, which can have significant implications.
Lenders should clearly explain this risk to borrowers before closing.
During this time, AFR is here to support you. Our team is fully prepared to help you continue placing coverage through AFR’s network of private flood markets. These markets often provide competitive pricing and broader coverage than the NFIP, giving you reliable alternatives for your borrowers. Your AFR representatives remain available to guide you and provide quotes throughout the hiatus.
At AFR, our priority is helping you stay compliant and protect your portfolios no matter the circumstances.