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House passes National Flood Insurance Program extension
On July 25, the House passed a bill by a vote of 366 - 52 to extend the National Flood Insurance Program (NFIP) through November 30. The “National Flood Insurance Program Extension Act of 2018” (S. 1182) is a short-term fix to extend coverage for lenders and borrowers during the upcoming hurricane season. As previously covered in InfoBytes, last November the House passed H.R. 2874, which would amend and reauthorize the NFIP through fiscal year 2022; however, the Senate Banking Committee has yet to act on the measure. The Senate must now pass S. 1182 to ensure the NFIP does not expire at the end of July.
Continuing Resolution Extends National Flood Insurance Program Deadline to December 22
As previously reported in InfoBytes, the House voted 237-189 on November 14 to pass legislation reforming and reauthorizing the National Flood Insurance Program (NFIP) for five years before it expired at the beginning of December. A continuing resolution (H.J. Res. 123), passed by both the Senate and House and signed into law by President Trump on December 8, amended the expiration date of Fiscal Year 2018 appropriations to December 22, and extended the NFIP another two weeks. The Senate Banking Committee is still waiting to act on a flood insurance bill.
House Passes Flood Insurance Bill Reforming and Reauthorizing National Flood Insurance Program
On November 14, the House voted 237-189 to pass legislation reforming and reauthorizing the National Flood Insurance Program (NFIP) for five years before it expires next month. As previously covered in InfoBytes, President Trump signed a three-month extension to the NFIP at the beginning of September in order to provide Congress additional time to establish a long-term financial solution for the program. The 21st Century Flood Reform Act (H.R. 2874) is designed to better facilitate compliance and clarify guidance for lenders and borrowers, and will, among other things, (i) change annual limits on premium increases for insurance obtained through the NFIP; (ii) require FEMA to consider the differences in flood risk between coastal and inland flood hazards when establishing premium rates; (iii) require FEMA to clearly communicate to policyholders the full flood risk to, and flood claims history of their property, and the effect of filing any additional claims; (iv) allow private insurers to continue selling policies on behalf of the NFIP, while also being allowed to sell their own private flood coverage; (v) revise federal flood mapping requirements, establish premium rates based on applicable flood insurance rate maps, and revise and clarify aspects of the appeals process; (vi) amend the Biggert-Waters Flood Insurance Reform Act of 2012 to clarify the time periods within which communities may consult with FEMA regarding mapping changes and submit data for consideration by the agency; (vii) revise the Flood Mitigation Assistance program to provide assistance for additional multiple loss properties; and (viii) amend the Flood Disaster Protection Act of 1973 to increase penalties against lenders and GSEs for violations of the mandatory purchase requirement from $2,000 to a maximum of $5,000 per violation.
H.R. 2874 now heads to the Senate.
President Trump Signs Government Funding Package, Temporarily Extends National Flood Insurance Program
On September 8, President Trump signed a government-funding package (H.R. 601) that temporarily extends the National Flood Insurance Program (NFIP), which was set to expire September 30, through December 8. The extension provides Congress additional time to establish a long-term financial solution. (See previous InfoBytes coverage on the NFIP here.) The Continuing Appropriations Act, 2018 and Supplemental Appropriations for Disaster Relief Requirements Act, 2017, also temporarily lifts the nation’s debt ceiling, funding the federal government through December 8, and delivers the first installment of emergency aid for victims of Hurricane Harvey.
FDIC Releases List of Enforcement Actions Taken Against Banks and Individuals in June 2017
On July 28, the FDIC released its list of 23 orders in administrative enforcement actions taken against banks and individuals in June. Civil money penalties were assessed against two banks, including one citing violations of the National Flood Insurance Act for (i) failing to obtain flood insurance before loan origination, and (ii) failing to follow force placed flood insurance procedures.
Also on the list are 13 Section 19 orders allowing applicants to participate in the affairs of an insured depository institution and four orders for removal and prohibition for bank employees breaching fiduciary duties and participating in “unsafe or unsound banking practices” leading to financial losses.
There are no administrative hearings scheduled for August 2017.
Senate Committee on Banking, Housing & Urban Affairs Releases Flood Insurance Bill
On July 17, Senate Committee on Banking, Housing & Urban Affairs Chairman Mike Crapo (R-Idaho) and Ranking Member Sherrod Brown (D-Ohio) released the text of the National Flood Insurance Program Reauthorization Act of 2017, which would reform the National Flood Insurance Program (NFIP) and extend it another six years. Among the provisions covered in the bill are: (i) risk mitigation, particularly in repeatedly flooded communities; (ii) compliance cost increases; (iii) predisaster hazard mitigation programs; (iv) flood risk disclosure requirements for sellers or lessors of real estate; (v) flood mapping program improvements; and (vi) various program improvements, including requirements for federal banking regulators to conduct annual compliance studies on mandatory purchase requirements in special flood hazard areas, and directions for “FEMA to annually study NFIP participation in areas outside of special flood hazard areas.”
“We have held multiple hearings and worked on a bipartisan basis to hear thoughts and concerns from the Program's stakeholders, regulators and from Banking Committee members,” Crapo and Brown stated in a joint release. “This bill represents the many areas where we have found agreement, and we look forward to working with our colleagues to address outstanding issues.”
The bill is one of many introduced this year in both the Senate and the House as the NFIP is set to expire at the end of September. (See previous InfoBytes coverage here and here.)
House Committee Okays Five Additional Flood Insurance Bills
On June 21, the House Financial Services Committee (Committee) approved changes to the National Flood Insurance Program (NFIP), passing five additional bills. As previously reported in InfoBytes, the committee passed two flood insurance measures on June 15. The approval of these latest bills completes a seven-bill package to reauthorize the NFIP.
According to the committee’s press release, the five newly passed bills include:
H.R. 2875 ,the “National Flood Insurance Program Administrative Reform Act of 2017”— introduced by Rep. Nydia Velazquez (D-N.Y.)— is intended to help NFIP policyholders when challenging claim denials and to also cut down on claim fraud. The bill passed in a 58-0 vote.
H.R. 1558, the “Repeatedly Flooded Communities Preparation Act” —introduced by Rep. Ed Royce (R-Cal.)—was approved by the committee in a voice vote. The bill will “ensure community accountability for areas repetitively damaged by floods” by requiring these flood-prone areas to design mitigation plans.
H.R. 1422, the “Flood Insurance Market Parity and Modernization Act”— introduced by Rep. Dennis Ross (R-Fla.)—allows homeowners to use private flood insurance to satisfy the flood insurance mandate, if the private policies are sufficiently similar to NFIP insurance policies. This bill passed by a vote of 58-0.
H.R. 2246, the “Taxpayer Exposure Mitigation Act of 2017”—introduced by Rep. Blaine Luetkemeyer (R-Mo.)—eliminates the requirement that commercial properties located in flood hazard areas must maintain flood insurance coverage. Additionally, the measure will “provide for greater transfer of risk . . . to private capital and reinsurance markets,” and will allow state and local governments to develop their own flood maps. The committee approved the bill in a 36-24 vote.
H.R. 2565, also introduced by Rep. Luetkemeyer, will “require the use of replacement cost value in determining the premium rates for flood insurance coverage.” The committee approved it in a 34-25 vote.
House Financial Services Committee Advances Two Flood Insurance Measures, Delays Action on Other Bills
On June 15, the House Financial Services Committee announced it had passed two flood insurance measures during a meeting to consider several bills to reform and reauthorize the National Flood Insurance Program (NFIP).
The Committee approved the 21st Century Flood Reform Act of 2017 (H.R. 2874) by a vote of 30-26. The bill, sponsored by Rep. Sean Duffy (R-Wis.), is designed to (i) improve the financial stability of the NFIP; (ii) improve the development of more accurate flood risk estimates through new technology and better maps; (iii) “increase the role of private markets in the management of flood insurance risks”; and (iv) “provide for alternative methods to insure against flood peril.”
Also approved by a vote of 53-0 was the National Flood Insurance Program Policyholder Protection Act of 2017 (H.R. 2868). The bill, sponsored by Rep. Lee Zeldin (R-N.Y.), is designed to protect NFIP policyholders from “unreasonable premium rates” and require FEMA to analyze “the unique characteristics of flood insurance coverage of urban properties” such as cooperative housing projects.
The Committee will consider additional measures the week of June 19.
Senators Introduce Bipartisan National Flood Insurance Program Reauthorization Bill
On June 13, a bipartisan group of senators introduced draft legislation to reauthorize the National Flood Insurance Program (NFIP) for six years, while incorporating reforms to address sustainability, affordability, and efficiency. Senator Bob Menendez (D-N.J.), a senior member of the Senate Banking Committee overseeing the NFIP, and a co-sponsor of the Sustainable, Affordable, Fair and Efficient National Flood Insurance Program Reauthorization Act of 2017 (SAFE NFIP), stated in a press release issued by his office, “SAFE NFIP addresses critical problems with the program, administered by the Federal Emergency Management Agency (FEMA), following Superstorm Sandy and other disasters: unsustainability, low participation rates, inaccurate flood maps, an indifference to the benefits of flood control infrastructure, agency mismanagement, unsustainable debt service costs and contractor profiteering.” Among other things, the Act proposes a cap on premium rate hikes and an interest freeze on the NFIP’s debt to the Treasury for six years after enactment and fosters investments in mitigation efforts. U.S. Senators John Kennedy (R-La.), Chris Van Hollen (D-Md.), Marco Rubio (R-Fla.), Elizabeth Warren (D-Mass.), Thad Cochran (R-Miss.), Cory Booker (D-N.J.), and Bill Nelson (D-Fla.) cosponsored the bill.
FDIC Releases List of Enforcement Actions Taken Against Banks and Individuals in April 2017
On May 26, the FDIC released its list of 18 administrative enforcement actions taken against banks and individuals in April. Among the consent orders on the list are civil money penalties for violations of the Flood Disaster Protection Act of 1973 and its flood insurance requirements. Also on the list are a cease and desist order and a civil money penalty assessment issued to a Louisiana-based bank (Bank) for violations of the Bank Secrecy Act (BSA), EFTA, RESPA, TILA, HMDA, and the National Flood Insurance Program. According to the cease and desist order, the FDIC Board of Directors agreed with the Administrative Law Judge’s recommended decision that the Bank engaged in unsafe or unsound practices, which warranted a cease and desist order and civil money penalty. The order also addressed a number of shortcomings identified by the Bank’s examiners, including the following: (i) the Bank’s BSA program lacked adequate internal controls to ensure compliance; (ii) it failed to provide correct and compete electronic funds transfer disclosures to consumers; (iii) borrowers were provided “untimely and improperly completed” good faith estimates; and (iv) the Bank repeatedly failed to accurately report required HMDA information to federal agencies.
An additional eight actions listed by the FDIC related to unsafe or unsound banking practices and breaches of fiduciary duty, including five removal and prohibition orders. There are no administrative hearings scheduled for June 2017. The FDIC database containing all of its enforcement decisions and orders may be accessed here.