The National Flood Insurance Program expired May 31, 2010 after three extentions. After May 31, the NFIP will not have the authority to issue new or renewal policies until Congress reauthorizes the program. Although this will not affect existing policies, renewal policies within a 30-day grace period, or policies purchased prior to the program's lapse, any new policies will be effected.

FEMA allows buyers to "assume" the seller's existing policy without having to re-issue it.  The purchase requirement for flood insurance may be met with non-NFIP policies; for instance, Lloyd's of London, Chubb and AIG have offered such insurance, but it can be very expensive and is limited to a certain number of states, with other conditions.

The National Association of Realtors  has been working with FEMA, FHA, Fannie, Freddie and the VA to provide guidance, similar to what it provided in April, for lenders as to the steps they may take to meet flood insurance purchase requirement during an NFIP lapse. With updated guidance in hand, lenders should have the assurances that they need to continue to close loans. FHA has already issued updated guidance. Fannie Mae, Freddie Mac, the VA, and other lending authorities are expected to release guidance shortly, and NAR will post the guidance at