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The NCUA Tuesday issued a Regulatory Alert to help credit unions prepare for the July 1 implementation deadline of an interagency rule that requires mortgage lenders to accept both private and government-backed flood insurance policies. The alert came as Congress struggles to reach a deal on an extension of the National Flood Insurance Program (NFIP).

The NCUA alert outlines specifics for the acceptable alternatives to NFIP policies, which include:

• private flood insurance that meets the rule's definition;
• private flood insurance accepted on a discretionary basis; and
• mutual aid society plans.

"Credit unions should be aware of this significant policy change in flood insurance regulations and update policies and procedures to address these alternative options to NFIP policies," said NCUA Chairman Rodney Hood in the alert.

The NFIP is currently set to expire Friday. Last week, the Senate passed a disaster aid package that included an extension of the NFIP through Sept. 30 and a stand-alone NFIP extension that would keep the program authorized through June 14. 

However, the House had already left for Memorial Day recess and has been unable to pass the disaster aid package or 2-week extension bill by unanimous consent during pro-forma sessions. The chamber is expected to try again Thursday.

NAFCU has urged lawmakers to not let the program lapse as it would put millions of Americans at risk.