A life preserver of sorts will be available to homeowners submerged in the troubling waters of flooding, according to the National Association of Realtors— that is thanks to action the Federal Housing Administration (FHA) announced last week, related to the extended availability of additional private flood insurance options to U.S. consumers.

The FHA proposal would pave the way to the use of private insurance—as long as it meets the agency’s definition, in conjunction with recent federal laws and pro-consumer industry practices. It’s a significant shift from current FHA regulations, established in 1999. Under those circumstances, homeowners with FHA-insured mortgages could only secure insurance from the National Flood Insurance Program.

“America’s 1.4 million Realtors are grateful to see the FHA take steps to make more private flood insurance options available to U.S. consumers,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco. Outdated federal regulations have for too long prohibited lenders from accepting private flood insurance that is often more affordable and more comprehensive than NFIP policies. Although regulatory hurdles remain before this proposed rule is finalized, NAR looks forward to continuing our work alongside the FHA, HUD and President-elect Biden’s administration to make private flood insurance more readily available to American property owners, Malta continued.

Malta sent a letter to HUD’s Assistant Secretary for Housing, Dana Wade earlier this year, reinforcing the NAR’s desire to see more private flood insurance options available in the marketplace.

“NAR members can provide numerous examples where the market has offered better coverage at lower costs than the NFIP, but the 1999 rule needlessly constrained consumer choice and created inequities between FHA and more conventional loan holders,” Malta wrote. “The 21-year-old rule must be updated to reflect current market realities or the FHA risks losing market share.”

Earlier this month, the FHA published a proposed rule that would allow a private flood insurance option instead of insurance through the National Flood Insurance Program (NFIP), when flood insurance is required by FHA.

In September, the White House signed a resolution that included an extension for the NFIP until September 30, 2021.

The changes, proposed Tuesday, would allow lenders to begin accepting private flood insurance policies for single-family insured loans for homes located in Federal Emergency Management Agency-designated Special Flood Hazard Areas (SFHAs), consistent with similar provisions in use by other industry participants.

“Our proposal would expand the options for obtaining flood insurance, rather than continuing to lock in borrowers to one federal option without any ability to comparison shop,” said Assistant Secretary for Housing and Federal Housing Commissioner Dana Wade. “We are also proposing important safeguards that will help protect borrowers, so their homes will have flood insurance coverage at a level at or above the level available through the National Flood Insurance Program.” —By Chuck Green (Green has contributed to the Wall Street Journal, Washington Post, Los Angeles Times, San Francisco Chronicle, Chicago Tribune, and others covering various industries, including real estate, business and banking, technology, and sports.)