NEW ORLEANS, LA (WVUE) -
Thousands of Jefferson Parish residents are no longer required to have flood insurance because of updated flood maps. But some were surprised to learn their lenders had stopped escrowing funds to pay for the coverage due to the new maps.
Insurance Commissioner Jim Donelon said Friday he believes banks and mortgage companies who stop escrowing funds to pay for such coverage have a responsibility to alert customers, especially if they get notification that coverage is about to lapse.
On Capitol Hill, there seems to be no urgency to reauthorize the financially-strapped National Flood Insurance Program long-term.
“A fight between the fiscal hawks who want to put the program on a five-year, pay for itself path and those of us in coastal states, republicans and democrats, New York, New Jersey and Louisiana , Florida, Texas, etc., who want a long term extension at an affordable price,â€ť Donelon said Friday.
Of late, all that proponents of the program have been able to push through are short-term extensions.Â The latest extension was to expire July 31.
“The National Flood Insurance Program ensures properties in every state, insuring over 5 million homes and businesses and $1.2 trillion dollars in assets,â€ť said U.S. Sen. Bill Cassidy, R-Louisiana, on the senate floor.
He succeeded in having the Senate approve a measure to extend the NFIP through January 31, 2019.
“It is imperative that Congress provides for a six-month extension of the NFIP now, so progress can continue on long-term reauthorization and reform of the NFIP,â€ť said Cassidy.
Thousands of property owners in Jefferson Parish were relieved to learn that coverage was no longer needed due to more favorable flood maps.
But some people in that category said they were caught off guard when they learned that their banks or mortgage companies were no longer escrowing money to pay for the coverage.Â Â
“The problem you’re describing has come up about banks that heretofore have been escrowing for flood insurance because it was a requirement and are no longer providing that serviceâ€¦and are telling them you still ought to get flood insurance, but we’re not going to escrow it as part of your payment any longer, you’re going to have to get with your agent or online with the NFIP,â€ť said Donelon.
He said mortgage companies and banks that receive notice that a borrowerâ€™s flood coverage is about to lapse have a responsibility to notify them.
“I would think they would have a duty to notify, get in touch with you and let you know that even though they didn’t send you a notice saying we’re not going to pay it for you any longer, if they get a cancellation notice I think it would be incumbent upon them to find you and let you know it,â€ť he said.
Donelon urges people to keep their coverage whether they are required to have it, or not.
Copyright 2018 WVUE. All rights reserved.