The National Flood Insurance Program expired, freezing new policies and potentially delaying mortgages, home sales, and housing programs, especially in Florida.

WASHINGTON — Authorization for the largest residential flood insurance program in the country expired Wednesday, leaving some homeowners unable to access new coverage.

As of Oct. 1, the National Flood Insurance Program (NFIP) cannot sell new or renew flood insurance policies. However, existing NFIP policies will remain in effect until their expiration date, and claims will continue to be paid as long as FEMA has the funds on hand.

Key details to keep in mind:
Renewal policies are generally issued if the application and premium are received prior to a lapse. Other renewals and policies expiring after a lapse must wait for reauthorization.
During a lapse, property buyers can assume existing/renewal policies. "Assignment of policies" allows insurers to substitute the buyer's name for the seller's without having to reissue the policy.
Private flood insurance backed by a source other than NFIP (such as Lloyd's of London) are not affected. Visit the Florida Office of Insurance Regulation page for options. Please remind your clients to read the fine print of any insurance policy.
The federal requirement to purchase flood insurance is suspended, which means it is up to lenders to decide whether to make loans in special flood hazard areas while NFIP insurance is not available.
“Each day a shutdown continues, the effects on the housing sector grow,” said Shannon McGahn, executive vice president and chief advocacy officer at the National Association of Realtors®.

How the shutdown affects housing and lending
NAR shared guidance to help members navigate the shutdown, highlighting NAR’s advocacy efforts.

Government-sponsored enterprises

Fannie Mae and Freddie Mac will keep operating during shutdowns. Federal worker employment still can be verified after closing, but tax transcripts may be delayed. Fannie Mae may hold loan delivery if Social Security numbers aren’t confirmed but Freddie Mac doesn’t require it. Flood insurance proof is still needed.

Internal Revenue Service

Only essential staff will be working, handling limited government-protection tasks. Most taxpayer services, including refunds and phone support, are paused.

Rural housing programs

USDA has halted new direct and guaranteed loans, so scheduled closings may be delayed. Existing construction disbursements will continue only to protect property. Rental assistance will continue only if funds remain and property threats are imminent.

Veterans Affairs

The VA will continue to guarantee home loans, but reduced staff may slow approvals, appraisals and certificates of eligibility.

Environmental Protection Agency

Most staff are furloughed, so expect delay in regulatory programs like wetlands approvals and lead paint enforcement.

HUD programs

The Federal Housing Administration (FHA) will keep endorsing most new single-family mortgage loans. Core operations, such as servicing and claims will continue, but staff-heavy processes like condo approvals may stop. Housing counseling and new voucher funding will be limited.

Small Business Administration

The SBA will not process new routine loans, but some, such as previously approved CDC 504 loans and disaster loans, will continue.

The Associated Press and the National Association of Realtors® contributed to this report.