At a Glance

FEMA says it will not sell or renew policies as long as the shutdown continues,Existing policies will remain in effect until their expiration date.

The Federal Emergency Management Agency said Thursday it will not extend the National Flood Insurance Program (NFIP) during the partial government shutdown, meaning policies will not be sold and renewed throughout the shutdown.

An extension for the insurance program was part of a temporary funding bill that stalled in the Senate last week before a Dec. 21 deadline to finalize funding.

Congress attempted to rectify the situation last week by passing a bill that was signed by President Donald Trump to extend flood insurance coverage until May 31, 2019.

FEMA, however, ruled against it.

The Insurance Journal notes that "FEMA is citing that limits agencies from entering into contractual obligations or making expenditures that are not fully funded."

So long as the shutdown continues, the agency says it will not sell or renew policies. Existing policies will remain in effect until their expiration date.

The housing industry, fearing that a hold on flood insurance could disrupt real estate closings and sales, reacted swiftly to FEMA's decision.

“Today’s ruling comes contrary to Congressional intent and is in conflict with to allow NFIP operations during the 16-day government shutdown in 2013,” Shannon McGahn, National Association of Realtors senior vice president of government affairs, told Housing Wire. “NAR and its 1.3 million members are extremely disappointed by this abrupt and ill-conceived change of course.”

“Last week, Congress passed legislation to fully reauthorize the NFIP through May,” McGahn said. “However, today’s surprise FEMA ruling jeopardizes tens of thousands of home sales across America, as NAR estimates up to 40,000 closings are disrupted each month that the NFIP cannot issue flood insurance policies.”

(MORE: Partial Government Shutdown: National Parks, Monuments Remain Open But Without Staffing)

Rob Nichols, president and CEO of the American Bankers Association said FEMA’s "unexpected decision will complicate and delay loan closings for and seek NFIP coverage for as long as the government shutdown continues," in a statement.

"This result is in direct conflict with what Congress and the president intended when legislation was passed and signed into law last week to extend the NFIP’s authorization for six months," Nichols said. "FEMA’s failure to inform Congress and the public earlier that such action would be taken despite the passage of the extension is distressing. We hope that FEMA will reconsider this unfortunate action immediately."

The partial government shutdown took effect at midnight Dec. 21 after Congress failed to negotiate a temporary funding solution for nine federal agencies, including the Department of the Interior.

The negotiations stalled over Trump's $5.7 billion request to fund a border wall.

Due to the impasse among legislators which forced the shutdown, more than 800,000 federal workers are now furloughed or are required to work without pay through the holidays, including 3,600 forecasters with the National Weather Service.

Other "essential" federal employees that are required to work without pay throughout the shutdown include 42,000 members of the U.S. Coast Guard, thousands of law enforcement officers and 5,000 firefighters with the U.S. Forest Service.