The Trump administration reversed course Friday and said it will restart the sale and renewal of federal flood insurance policies amid an ongoing government shutdown.
The Federal Emergency Management Agency had said this week that since its parent agency, the Department of Homeland Security, had not received funding prior to a showdown between Congress and President Donald Trump over border security, it couldn't write new flood insurance policies or renew expiring ones. The decision threatened home sales dependent upon having valid flood insurance in force.
Members of Louisiana's congressional delegation criticized the initial decision, and were quick to celebrate the reversal Friday.
"FEMA’s initial (National Flood Insurance Program) guidance made no sense, and I’m happy to announce they ... will start selling new flood insurance policies again. It’s unfortunate so many people were inconvenienced due to FEMA’s error, but I’m glad they are correcting it so home sales in limbo can proceed," Sen. Bill Cassidy wrote in a statement.
The Federal Emergency Management Agency says it will not issue new flood insurance policies or renew existing ones that lapse, upsetting membe…
In an interview, Rep. Steve Scalise said the federal Office of Management and Budget, which administers the federal budget, gave FEMA the go-ahead to continue writing policies. He said the outcry from members of Congress and real estate agents whose transactions were in danger played a strong role in the reversal.
"I commend the agency, FEMA, for at least recognizing that we wanted this reversed and to have it done quickly because of the negative effect to the real estate market and homeowners," Scalise said. "Flood insurance policies have always been written in shutdowns. I think it was a bad legal interpretation they had gotten and when OMB gave them new guidance they were quick to reverse.
"Most important(ly), people can continue buying homes and getting flood insurance, and have the peace of mind they deserve if a storm hits or flood occurs that their home will be protected," the Louisiana Republican said.
Gov. John Bel Edwards, a Democrat, tweeted at the Republican president to thank the administration for stepping in.
"This is welcome news for the thousands of homeowners in Louisiana who depend on the National Flood Insurance Program. Thank you @POTUS for recognizing how important this is," Edwards tweeted.
As rain fell Thursday, the governor had reminded federal authorities that Louisiana has more than half a million NFIP policies, and about 40,000 renew each month. Property owners in high-risk floodplains — which cover much of the state — are required to carry flood insurance if they have a federally backed mortgage.
Coverage rose dramatically in areas hit by the 2016 flood; Livingston and Ascension parishes saw a 36 percent and 34 percent increase in policies, respectively. Those policies and existing coverage would not have been available for renewal under FEMA's initial plan.
The announcement that insurance policies would not be available caused havoc in the housing market.
Bankers were limited in issuing mortgage loans. Real estate agents said transactions were falling through as prospective home buyers feared they wouldn't be able to protect their investments, even though the federal government would have legally demanded they carry coverage just days before.
Katie Gagliano of The Advocate staff contributed to this report.