Flood Servicing Recommendations Should the NFIP's Authority Expire



On December 1, 2018 the president passed a short-term bill (H.R. 7187) that temporarily extends the NFIP's authority through December 7, 2018.

The Senate also sent a longer-term reauthorization bill (S. 3628) to the House that would extend the NFIP's authority through May 31, 2019. Congressmen, primarily from the coastal states, are expected to make yet another push for larger reform leading up to the May 31 deadline.

If the NFIP's authority expires on December 7 or May 31, we recommend your financial institution continues to maintain all normal practices related to flood insurance servicing, including:

  • Timely remittance of escrow payments
  • Proper exposure processing
  • Flood lender placement as per normal guidelines

 

The following are key impacts to NFIP policies should a lapse in authority occur at any point:

New Policies or Requests to Increase Coverage:

  • Applications for new policies or requests to increase coverage dated after lapse will not be issued or processed
  • Applications for new policies or requests to increase coverage will not be issued if received after the grace period AND the premium payment is not received within 10 days of the application date 

 

Renewals:

  • Renewal offers will not be made during lapse
  • Renewals will be issued if renewal offer is made prior to lapse AND premium is received before or during lapse period

 

Cancellations:

  • Policies can be canceled during lapse period according to NFIP cancellation reason codes 

 

Endorsements:

  • Endorsements that do not increase coverage will be processed
  • Existing policies may be assigned during grace period

 

Claims:

  • Claims on valid, in-force policies will be processed and paid as usual

 

Please note that if a lapse occurs in the NFIP authority, it will not interrupt or alter our processes related to the monitoring, escrowing, or lender-placement of flood insurance.

Should you have any questions regarding how to handle future lapses, you may contact our loan servicing compliance team at LSPDcompliance@alliedsolutions.net.

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Content in the blog posts are the opinion and views of the writer, and don't necessarily reflect the opinions or views of Allied Solutions.

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