WASHINGTON-House Financial Services Committee Chairman Mike Oxley (R-Ohio) and incoming-Ranking Member Barney Frank (D-Mass.) are poised to introduce legislation early next Congress to reauthorize the national flood insurance program, which could affect mortgages in risky flood zones. In the meantime, the Federal Emergency Management Agency is working with lenders to ensure seamless transition into the expected reauthorization. Oxley and Frank are making an effort with others in Congress, as well as the administration, to move fast to reauthorize FEMA's National Flood Insurance Program. The current program ended with the start of the New Year. The 107th Congress adjourned Nov. 22 without addressing the issue, but the Oxley-Frank bill is expected to be retroactive. "We hope that Congress will pass this legislation quickly and retroactive to January 1, 2003 so as to minimize exposures from flood loss for any credit unions closing loans during the expiration period. We are anticipating guidance from NCUA and/or FEMA to assist credit unions with safety and soundness considerations as well," NAFCU Director of Regulatory Compliance Linda Dent commented. Certain mortgage agreements require credit unions and other lenders to carry flood insurance. Of the 4.4 million flood insurance policyholders nationwide, only policyholders whose premiums come due during the down time have the possibility of being affected. According to a FEMA memo, if lenders' premium payments for renewal or new applications were received by the end of 2002, coverage would continue uninterrupted "under existing statutory authority." Those received on or after January 1, 2003, will be held until after the reauthorization. "This is in anticipation that the hiatus will be relatively brief," the memo explained. Claims during that time will be honored once reauthorization is established. "We're quite optimistic that this will have no adverse impact on policyholders," FEMA's Federal Insurance and Mitigation Administrator Anthony S. Lowe, who oversees the NFIP, said in a statement recently. "Similar interruptions have happened before and were remedied without hindering our operations or affecting people's coverage and there's no reason to think this will be different." "While FEMA is confident that Congress will move quickly to fully reauthorize the NFIP when it reconvenes on January 7, 2003, and will do so retroactively to January 1, any such limited interruption is of concern to property owners who need to renew policies in early January, home-buyers who must purchase flood insurance as a condition for obtaining mortgages from federally regulated lenders, and property owners refinancing existing mortgages who must purchase or renew such coverage," FEMA's statement read. "There is no reason for alarm on the part of property owners, including new home buyers who are scheduled to close in early January," Lowe said. "This situation has the full attention of everyone involved in the NFIP, and we are all resolved to make sure that everything is in place to guarantee that, with Congress' help, our operations will continue seamlessly for new and current policyholders alike." NCUA Staff Attorney Chrisanthy Loizos said that NCUA had met with FEMA, as well as Housing and Urban Development, Fannie Mae, and others on December 6 to discuss the issue. Since then, NCUA has met with the other federal financial services regulators and will be issuing either a joint statement or individual statements with an informal goal of December 20, 2002. CUNA Director of Compliance Information Val Moss said that the lapse could present a problem for credit unions. She pointed out, "If there is no federal flood insurance, there is no Part 760 (NCUA's flood insurance regulation)." She said she was confident NCUA would provide guidance, in conjunction with other federal financial services regulators, to clarify and alleviate the situation. "These kinds of lapses occur. Unemployment is going through the same thing flood insurance is going through," she explained. CUNA's legislative affairs team sent a letter to Congress supporting quick action on the bill, Moss added. [email protected]