Congress’ flood insurance lapse strands residents, home sales
BOCA RATON, Fla. – June 28, 2010 – Real estate broker Jess Acevedo expected a good month in June with the first-time homebuyer credit about to expire, but now 14 deals he carefully shepherded to closing are on hold because Congress has failed to reauthorize the National Flood Insurance Program.
Among them is a Boca Raton couple with three children who were set to close Friday on a four-bedroom, two-story foreclosure. Now they are stuck in limbo, worried that their tax-credit window is closing, Acevedo said.
“They’re all frustrated,” he said.
With hurricane season upon us, it could not be a worse time of year for Floridians to be without flood insurance.
The National Association of Realtors estimates that for each day Congress delays, 1,400 sales are tied up. In Florida, it’s affecting about 175 deals a day.
The flood insurance program expired May 31. Since then, some lenders have been willing to accept binders, or promises, to write flood insurance policies as soon as Congress reauthorizes the program. But others are refusing to allow deals to go through without insurance.
U.S. Rep. Ted Deutch, D-Boca Raton, who voted to reauthorize the program, said Congress’ delay has brought an already weak real estate market to a “total standstill.”
“To say that Florida’s economy is in a fragile state would be an understatement,” he said. “In this uniquely perilous economy, if someone is prepared to buy a new home, they should be able to buy it.”
The halt in flood insurance isn’t affecting only homebuyers.
People living in flood zones whose insurance has expired also are beginning to panic.
“It’s hurricane season, and millions of people are going to be affected if there’s a big hurricane,” said Roger Bash of Palm Beach Gardens.
Bash paid to have his insurance renewed more than a month ago. Last week he got a letter from Allstate saying the company could not write a new policy. All he can think about are the Louisiana residents caught without flood insurance when Hurricane Katrina roared in.
He wonders how Congress could allow so many citizens to be at risk.
Between September 2003 and September 2004, when four hurricanes slammed the state, Florida residents filed 21,758 flood insurance claims.
The National Flood Insurance Program was jammed into a controversial $110 billion jobs package designed to extend unemployment benefits. House members stripped the insurance provision into a separate bill and passed it this week. But senators, who shot down the jobs bill, left for the weekend without taking up the insurance bill.
Florida Insurance Commissioner Kevin McCarty has called Congress’ delay “irresponsible.”
Bill Richardson, president-elect of the Realtors Association of the Palm Beaches, is one of the lucky ones who said his business hasn’t slowed because of the lack of flood insurance. He’s seen plenty of commercial real estate deals go through with a binder.
About 1,000 deals slated to close in June in Palm Beach County will need flood insurance or a binder, Richardson said.
And if Congress doesn’t act soon, he expects more lenders could balk and refuse to accept binders.
“There are a lot of deals on the table,” he said.
Copyright © 2010 The Palm Beach Post, Fla., Laura Green. Distributed by McClatchy-Tribune Information Services.
