PARAMOUNT MORTGAGE - LENDER'S BLOG

President Barack Obama is expected to sign a bill this week that extends the National Flood Insurance Program (NFIP) through September 30, 2011.

The present flood insurance program is set to expire on September 30, 2010. Unlike auto insurance, which covers damage to submerged vehicles, a standard homeowner's insurance policy does not cover flood damage.

When the NFIP runs out of funding, which Congress has let happen four times since December 2009, homeowners cannot renew their flood policies. Homebuyers in flood zones will not be able to purchase flood insurance causing delays in their closings.

The House Financial Services Committee's goal is to replace NFIP with their new Flood Insurance Reform Priorities Act to provide sustained funding for flood insurance over the next five years.

However, it is unlikely that a comprehensive reform bill will move out of the committee until the 112th Congress goes into session next year.

Housing Starts Surge 10.5% in August, Permits Rise

"Home construction increased last month and applications for building permits also grew," reported USA Today this week, "But the gains were driven mainly by apartment and condominium construction, not the much larger single-family homes sector."

The U.S. Census Bureau released August 2010 statistics gathered by the U.S. Department of Housing and Urban Development (HUD) and the Commerce Department on new residential construction earlier this week.

Construction of new homes and apartments rose 10.5% in August from a month earlier to a seasonally adjusted annual rate of 598,000. That's the highest level since April.

Single-family housing starts in August were at a rate of 438,000 or 4.3% above the revised July figure of 420,000. This segment represents about 73% of the market.

Construction activity rose 34% in the West and was up 22% in the Midwest and 7% in the South. However, construction fell by 24% in the Northeast.

Building permit applications, a sign of future activity, grew nearly 2% to an annual rate of 569,000.

In the Census Bureau's annual listing of the top 20 metropolitan areas for building permit applications, Houston, TX topped the list at 27,326. St. Louis, MO slipped in at the bottom with 5,162 applications. Tampa, FL was in the middle of the pack at number 11 with 6,962 applications.