This was a vote on an amendment by Rep. Jackie Speier (D-CA) that would have prohibited lenders from requiring homeowners to purchase flood insurance in an amount greater than the outstanding principal balance of a home loan. This amendment was offered to legislation that would reauthorize the National Flood Insurance Program (NFIP) through 2016 (which would allow the program to continue operating for another five years). Speier argued that her amendment was intended to prevent homeowners from being forced to purchase a flood insurance policy that was greater than the annual cost of their home mortgages.

Speier urged support for her amendment: “I would venture to say that we don't see ourselves as being in the insurance business by choice. We are in the flood insurance business out of necessity, and it would seem to me that it doesn't make a lot of sense to impose an obligation on homeowners to purchase insurance that exceeds the actual cost of their mortgage, especially when we note that the average flood damage claims are anywhere from $25,000 to $35,000. So to require someone who has a $13,000 loan balance to purchase flood insurance for $250,000 and pay a fee, a yearly premium of $2,400, is just, I think, unacceptable…”

Rep. Judy Biggert (R-IL) opposed Speier’s amendment, arguing that it would effectively leave some homeowners without flood insurance, and force them to bear the full financial burden of flood damage on their homes: “Limiting the amount of coverage to the unpaid principal balance leaves consumers at risk of having to incur the costs of repair on their own and, additionally, is not reflective of the current state of industry practices…Consumers, not lenders, will bear the financial brunt of a disaster. Limiting flood insurance to the unpaid principal balance may protect the lender's financial interest in the property; however, it doesn't protect the consumer's equity and investment in the property. NFIP establishes the minimum amount of coverage required at the lesser of the outstanding balance of the loan or the maximum available NFIP coverage, which today is $250,000 for residential and $500,000 for commercial properties.”

The House rejected Speier’s amendment by a vote of 195-230. Voting “yea” were 172 Democrats and 23 Republicans. 215 Republicans and 15 Democrats voted “nay.” As a result, the House rejected an amendment that would have prohibited lenders from requiring homeowners to purchase flood insurance in an amount greater than the outstanding principal balance of a home loan.