Experts in the mortgage industry have noted potential impacts on their business if the National Flood Insurance Program (NFIP) is allowed to expire. The NFIP, which is set to expire on September 30, 2021, could have a severe impact on the mortgage industry if an extension is not approved. Therefore, it is important for the mortgage industry to understand the implications of an NFIP expiration.
One potential implication is that lenders who originate mortgages in communities that require flood insurance will need to obtain private flood insurance from insurance companies. This could cause disruptions in closing and servicing loans in those communities, as the private companies may be overwhelmed with demand and not able to cover the amount of risk that the NFIP currently covers. It could also cause flooding costs to increase, resulting in higher mortgage rates for potential homeowners.
Furthermore, lenders may be unable to complete mortgages without obtaining accurate information from NFIP. If the NFIP expires, lenders will need to forgo approval from the government-sponsored source and rely on alternate data sources. This could take longer, resulting in delays in transactions and a significant increase in operational costs.
In summary, an NFIP expiration could have potentially devastating consequences for the mortgage industry. With the expiration date drawing near, it is important for experts in the mortgage industry to understand the implications of this situation. Bullet points:
– Potential implications for mortgage industry if NFIP expires:
– Need for private flood insurance from insurance companies
– Cost of flooding could increase, leading to higher mortgage rates
– Need for alternate data sources if NFIP isn’t available, leading to delays and increased operational costs
– It is important for experts in the mortgage industry understand the implications of an NFIP expiration.
You can read this full article at: https://www.housingwire.com/articles/mortgage-lending-could-be-halted-by-flood-insurance-programs-expiration-experts-warn/(subscription required)
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