President temporarily extends flood insurance program

Along with the closing extension for the home buyers tax credit, President Barack Obama today signed a bill for another extension, a temporary one for the National Flood Insurance Program.

The program, run by the Federal Emergency Management Agency, has lapsed and then been temporarily extended a few times this year.

The new law extends the program to Sept. 30, which also is the new closing deadline for home buyers who want up to $8,000 in tax credits.

The lapses did not affect existing policy holders, but home buyers and homeowners whose policies were expiring had scrambled to get private and temporary coverage if their properties were along Long Island's 1,180 linear miles of shores.

Federal agencies, including those that insure mortgages, had advised lenders to go ahead with closings if buyers had proof of pending policies.

It also made more work for lenders. For example, mortgage finance giant Freddie Mac told lenders to check each buyer's flood insurance policy when the national program was running again, just to confirm that the policy had gone through.

The National Flood Insurance Program works with about 90 private insurance firms to offer policies for property owners and renters, including those in areas with low risk of floods. Federally-regulated and federally-insured lenders must require such policies on properties in areas prone to floods.