Expiring insurance program could affect 1,300 daily home sales during shutdown

The National Association of Home Builders (NAHB) has raised concerns about the potential impact of a government shutdown on the housing market. In a letter to Congress, the NAHB urged lawmakers to extend the National Flood Insurance Program (NFIP) before the looming deadline. If the program expires, around 1,300 property sales per day could be affected, particularly in areas where flood insurance is required for obtaining a mortgage. The NAHB also warned that home values and consumer confidence could suffer, and homeowners under NFIP would be unable to renew their insurance.

The NFIP is relied upon by almost 5 million homeowners across 20,000 communities. Claims on existing coverage would continue to be paid out as long as funding lasts, with the program currently holding $3.8 billion for this purpose. However, if the shutdown persists, homeowners and renters may have to forgo flood insurance or turn to the private market for coverage.

In addition to the impact on the NFIP, a government shutdown would also affect Federal Housing Administration loans. The Department of Housing and Urban Development would be unable to process Title I or home equity conversion mortgages.

The HUD has expressed concerns about the potential consequences of a prolonged shutdown on the housing market. They warn that each day the shutdown continues, the impacts on potential homeowners, home sellers, and the entire housing market could worsen. It could result in a decline in home sales, reversing the recent trend of a strengthening market.

Overall, the NAHB and other industry experts are calling on Congress to consider the effects of a government shutdown on housing-related federal programs. They emphasize the importance of extending the NFIP before the deadline to avoid disruption in the housing market. The potential consequences of a shutdown include hindrance to property sales, reduced home values, and negative effects on consumer confidence.


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