EXCLUSIVE: Democrats risk flood insurance lapse in their shutdown fight, home builders and White House warn

EXCLUSIVE: As the Sept. 30 government funding deadline looms, the Trump administration is warning that millions of Americans could lose flood insurance coverage if Democrats refuse to back a House-passed spending bill that also extends the National Flood Insurance Program (NFIP).

The White House supports the continuing resolution (CR) approved by House Republicans, which would avert a shutdown and reauthorize the NFIP. 

Administration officials said they worked to ensure NFIP was part of the current funding package, reflecting what they call the urgency of protecting millions of policyholders during hurricane season.

Democrats have said they will not support the measure, citing broader spending disputes. Trump administration officials argue the standoff puts homeowners, the housing market and disaster recovery funds at risk just as peak storm season arrives.

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“In an exclusive statement to Fox News Digital, a White House official said: ‘The NFIP is a vital program utilized by millions of Americans, and it’s not a hard call to extend it – which is exactly why the administration supports the House-passed CR that would do so. Unfortunately, Democrats are happy to shut down the government and hurt the many thousands of Americans who rely on this program in the process.’”

According to administration figures reviewed by Fox News Digital, a lapse in NFIP authorization could disrupt about 1,300 property sales every day. That’s roughly 40,000 closings in a single month, all in areas where flood insurance is required to secure a mortgage.

More than 400,000 policies are set to expire in October. Officials say about 152,000 of those have been prepaid, but more than 250,000 households could still lose coverage if the program stalls.

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Administration officials also pointed to October 2024 as a warning sign. That month saw more than 427,000 new or renewed policies. Roughly 41,000 homeowners bought new policies while about 33,000 dropped coverage, leaving a net gain of nearly 9,000. Officials warn that similar growth this year could collapse if NFIP lapses.

Administration officials told Fox News Digital that FEMA currently has $2.6 billion available to pay valid claims, including $1.5 billion in the National Flood Insurance Fund and $1.1 billion in reserves. But they warned the agency would be unable to borrow additional money from the Treasury if a major disaster exceeded those reserves, a scenario they described as “dangerous and avoidable.”

The National Association of Home Builders (NAHB) echoed those concerns. 

“Past disruptions of the NFIP have caused immediate and widespread negative impacts on property sales, home values and consumer confidence,” NAHB said in an exclusive statement to Fox News Digital.

“Home sales would cease in areas where flood insurance is mandatory in order to obtain a mortgage. What the housing market needs now is stability and certainty. NAHB calls upon the House to act quickly to continue to fund the operations of the federal government including the extension of the NFIP.”

The NFIP has a long history of stopgap extensions. Since 2017, Congress has reauthorized the program more than 30 times, often through short-term measures. Lawmakers have typically made coverage retroactive to prevent permanent gaps, but even brief lapses have stalled real estate closings and left homeowners in limbo. The program currently serves about 4.5 million policyholders nationwide.

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Unless lawmakers strike a deal, FEMA will be barred from selling or renewing flood insurance policies starting Oct. 1, a lapse that could leave millions of homeowners in limbo as Washington hurtles toward a shutdown. Administration officials argue the risk is especially acute this year as hurricane season continues.

FEMA, Schumer and Jeffries did not immediately respond to Fox News Digital’s request for comment.