Flood insurance on hold: What Houston-area homeowners need to know during government shutdown
The Federally funded National Flood Insurance Program is on pause due to the government shutdown what that means for homeowners and those purchasing property
Houston families living in flood-prone areas face a critical challenge as the government shutdown halts the National Flood Insurance Program, leaving thousands unable to secure or renew coverage with two months remaining in hurricane season.
The Problem
The National Flood Insurance Program does not operate during government shutdowns, meaning residents cannot obtain or renew policies. This timing is particularly troubling for Houston, where hurricane season still has two months to go.
The stakes are high: one in five Texans lives in a 100 or 500-year flood plain, with many concentrated in Harris County and Galveston. The National Flood Insurance Program is an affordable alternative to private insurance for these vulnerable communities.
According to the General Land Office, the program received over 90,000 claims for Hurricane Harvey, providing a crucial lifeline to affected families.
Impact on home sales
The shutdown’s effects extend beyond existing policyholders. Anyone attempting to purchase a home using a lender that requires flood insurance cannot close on their purchase while the program remains paused.
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John Braun, owner of Bayou Properties Realty, explained the situation facing homeowners: “If their policy is about to lapse and the government has not reopened, their policy will lapse when it is set to, and they cannot renew it if FEMA is not up and running again, taking new applications. So then they would have to look at what private options they may have.”
Beyond flood insurance: Other loan programs affected
The shutdown’s impact reaches far beyond flood insurance, creating additional roadblocks for homebuyers across multiple loan programs.
“Outside of just flood insurance, again, FHA, VA, all of those are going to be much slower to respond on getting the verification of eligibility for a VA loan,” Braun explained. “Or if you’re self-employed, getting the IRS to verify income so that you can get your approval for your loan that way.”
USDA loans face particular challenges during the shutdown. “If you’re buying farm and ranch, which we have a lot of around Houston, the USDA shuts down during the shutdowns,” he noted, affecting rural property purchases throughout the greater southeast Texas area.
If you are a small business owner, the SBA Loan will also have a longer process due to government delays.
What should you do now?
Be proactive and patient:
- Contact your insurance agent as soon as possible to explore private insurance options if your policy is set to expire soon.
- Work closely with a quality realtor, mortgage lender, and insurance agent if you’re in the process of buying a home.
- Gather all necessary documents now so you’re ready to act immediately once the government reopens, preventing further delays.
