[Congressional Record Volume 149, Number 3 (Thursday, January 9, 2003)]
[Senate]
[Pages S156-S157]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SHELBY (for himself, Mr. Sarbanes, Mr. Bond, Ms. Mikulski, 
        Mr. Bunning, Mr. Bennett, Mr. Allard, Mr. Enzi, Mr. Hagel, Mr. 
        Chafee, Mr. Johnson, Mr. Reed, Mr. Schumer, Mr. Bayh, Mr. 
        Miller, Ms. Stabenow, and Mr. Corzine):
  S. 122. A bill to extend the national flood insurance program; to the 
Committee on Banking, Housing, and Urban Affairs.
  Mr. SHELBY. Mr. President, I rise today to introduce the ``National 
Flood Insurance Program Reauthorization Act of 2003.'' This bill, which 
is cosponsored by the Ranking Democrat on the Banking Committee, 
Senator Sarbanes, as well as Senators Bond and Mikulski, the Chairman 
and Ranking Member, respectively, of the Subcommittee on VA, HUD and 
Independent Agencies Appropriations, will provide a one-year extension 
of the lapsed federal flood insurance program.
  The National Flood Insurance Program, ``NFIP'', expired on December 
31, 2002. The expiration of the program has prevented homeowners and 
home buyers from obtaining or renewing flood insurance policies in the 
intervening time. Since anyone buying or refinancing a home in a flood 
plan must have flood insurance, NFIP's expiration will block the path 
to home ownership for many Americans, and have a disruptive effect on 
residential real estate and mortgage markets.
  I have a December 6, 2002 letter from Anthony S. Lowe, the 
Administrator of the Federal Insurance and Mitigation Administration, 
which goes into greater detail regarding the consequences of the 
expiration of the NFIP. As Director Low indicates in this letter the 
lapse of this authority could effect as many as 400,000 households in 
the month of January alone. I ask unanimous consent that this letter be 
printed in the Record.
  The bill that I am introducing today simply extends the NFIP through 
the end of this calender year, retroactive to January 1, 2003. As such, 
it's purpose is the same as S. 13, which the Senate passed last 
November 20th.
  The House passed companion legislation this week, and it is our hope 
to have a short term extension of the NFIP enacted into law as soon as 
possible. This will permit the two Houses of Congress to consider the 
larger issues confronting the NFIP in a deliberate manner, without 
creating hardship for homeowners and undue turmoil in our nation's real 
estate markets.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                          Federal Emergency Management Agency,

                                 Washington, DC, December 6, 2002.
     U.S. Senate,
     Washington, DC.
       Dear Senator: On December 31, 2002, certain basic 
     authorities for the Federal Emergency Management Agency's 
     National Flood Insurance Program (NFIP) will expire. The 
     continuing resolution (P.L. 107-294), which extends FY 02 
     baseline funding through January 11, 2003, does not extend 
     NFIP authorization. This lapse in authority in January alone 
     could affect as many as 400,000 households seeking to obtain 
     or renew a flood insurance policy in nearly 20,000 
     communities in all 50 States and territories.
       In particular, the lack of authorization for NFIP to issue 
     and renew policies will cause significant disruption to 
     policyholders, the lending and real estate industries, 
     secondary mortgage market, many private insurance companies 
     writing flood insurance under arrangements with the NFIP, and 
     particularly those seeking home loans or mortgage refinancing 
     that requires flood insurance as a precondition to 
     settlement.
       The lapse in authorization will also have a negative impact 
     on public entities that provide or require flood insurance, 
     including Fannie Mae and Freddie Mac, which together control 
     about 85% of the secondary mortgage market in the country. In 
     addition, since policy renewal billing is generally conducted 
     45-90 days prior to expiration of a policy, unless our 
     authority to renew policies is reauthorized immediately, many 
     more individuals will be impacted than the above initial 
     estimate.
       The four authorities requiring reauthorization are sections 
     1309(a)(2), 1391, 1336 and 1376(c) of the National Flood 
     Insurance Act of 1968 (P.L. 90-448). Should they lapse, the 
     resulting uninsured flood losses could impose significant 
     hardship on citizens, and increase costs to the Federal 
     government and the States. I would urge Congress to act as 
     quickly as possible to reauthorize this important program 
     effective January 1, 2003. Should you have any questions on 
     this issue, please do not hesitate to contact our 
     Congressional and Intergovernmental Affairs Division at (202) 
     646-4500. Thank you for your consideration.
           Sincerely,

                                              Anthony S. Lowe,

                                                    Administrator,
                  Federal Insurance and Mitigation Administration.

  Mr. SARBANES. Mr. President, I am pleased to join with Senator Shelby

[[Page S157]]

and others of my colleagues in introducing the National Flood Insurance 
Program Reauthorization Act of 2003. This legislation is similar to 
legislation I introduced last year S. 13, which would have reauthorized 
the National Flood Insurance Program (NFIP), for one year, preventing a 
lapse in the Federal Emergency Management Agency's authority to 
administer this important program. The Senate passed this bill on 
November 20, 2002, but unfortunately, the House of Representatives did 
not consider it before adjourning for the year. FEMA's authority to 
manage the NFIP expired on December 31, 2002.
  FEMA has estimated that even a brief lapse in its authority to run 
the NFIP could affect approximately 500,000 households seeking to 
obtain or maintain flood insurance, which in many cases is a 
precondition for settlement of a mortgage or home loan. The NFIP was 
created by Congress in 1968 in response to the lack of such insurance 
being offered by the private sector. This program made flood insurance 
available in communities that adopted flood plain management 
regulations designed to reduce future damages from flooding, and it is 
now available in almost 20,000 participating communities nationwide. As 
of September 30, 2002, the NFIP had almost 4.4 million policies in 
force, representing more than 90 percent of the flood insurance in the 
United States. The availability of flood insurance helps Americans 
prepare for floods, while reducing the need for federal disaster 
assistance after a flood.
  The unfortunate lapse in FEMA's authority has caused confusion and 
uncertainty in the real estate industry for both lenders and borrowers. 
The Federal Insurance and Mitigation Administration within FEMA has 
made efforts to work with the banking regulators, the lending 
community, and other stakeholders to address their concerns about the 
lapse in FEMA's authority. While these efforts have been helpful, the 
only effective solution is a rapid reauthorization of this program by 
the Congress.
  The legislation we are introducing today makes reauthorization of the 
NFIP retroactive to December 31, 2002, to minimize any disruption that 
would be caused by a lapse in FEMA's authority. We have worked closely 
with FEMA in developing this language, and it is supported by a 
coalition of industry representatives, including America's Community 
Bankers, the American Bankers Association, the American Insurance 
Association, the American Society of Appraisers, the Appraisal 
Institute, Fannie Mae. Farmers Insurance Group, Freddie Mac, 
Independent Insurance Agent & Brokers of America, the Mortgage Bankers 
Association, the National Association of Homebuilders, the National 
Association of Mortgage Brokers, the National Association of 
Professional Insurance Agents, and the National Association of 
Realtors.
  Property owners and mortgage lenders throughout the country rely on 
the NFIP to insure their properties against flood damage. Unless the 
NFIP is reauthorized, that protection will disappear. I urge my 
colleagues to support swift passage of this urgently needed 
legislation.
                                 ______