Without flood insurance, lenders are prohibited by law from originating mortgages in the more than 19,000 communities throughout the country that are located at least partially in a flood plain. According to FEMA, 90 percent of all natural disasters are flood-related, and as many as 8 million households are at risk from flooding at any given moment.

However, lawmakers corrected their oversight shortly into the new year and coverage was not interrupted.

The National Flood Insurance Program was created by Congress in 1968 because coverage from private carriers was generally not available. But now, lawmaker's forgetfulness notwithstanding, repeat losses are placing a financial strain on it.

FEMA says some 45,000 properties insured under the program have experienced repetitive losses. Over the years, it adds, they have cost the flood insurance program about $3.8 billion, or 38 percent of total losses.

Worse, almost one in four of these properties have had four or more losses, or two or three losses that cumulatively exceed their value. And a few places have been flooded more than 20 times in last two decades. That's an average of more than once a year.

"The situation surrounding these properties is critical, not only for the home owners who live in these susceptible areas, but also for the NFIP, which cannot sustain this level of claims activity," says FEMA's acting director, Robert Shea, testified a few years ago.

"In any given year, these buildings will be flooded again (and) the owners on the insured properties list will again file claims. And this will happen every year unless we do something to reduce the hazard of repeat flooding."

Under Rep. Bereuter's bill, FEMA would have the authority to mitigate flood risk or buy out "severe repetitive loss" properties. If an owner refuses a government offer to mitigate – which could include elevating the property or otherwise flood-proofing it, selling it, relocating it or perhaps even tearing it down – they would have to buy flood insurance at the full actuarial premium rate.

During markup, the committee narrowed the class of properties considered to be at risk for severe repetitive loses from what was originally proposed and approved an amendment that requires any federal buyout to cover the full amount owed on the property. Under the original bill, only the principal amount of the mortgage was covered, not insurance and taxes.

Also, to give lenders time to protect their interests in the houses, they must be notified when a mitigation or buyout offer was made and when it was either refused or accepted.

As it is now, Uncle Sam subsidizes the rates for the first $35,000 of coverage on properties that were enrolled in the program prior to the time the federal government first published maps identifying special flood hazard areas. Also known as 100-year floodplains, these areas have the greatest chance of flooding in any given year.

Owners of structures covered after the maps were drawn pay full premiums. Currently, according to the General Accounting Office, that's an average of $310 a year.

The average annual premium of a subsidized policy is $610. That's twice the going rate for properties not grandfathered into the program, but the government assumes five times the risk. If the subsidy were to be eliminated, says the GAO, the premium would more than double to about $1,300.

About 30 percent of the 4.3 million policies in force as of last year were subsidized. And as a result, the program does not collect sufficient premium income to build the reserves necessary to meet expected losses in the future. Indeed, since 1994, FEMA has had to borrow more that $2 billion from the Treasury to cover claims and operating expenses under the program.

Lawmakers, of course, never intended the program to be actuarially sound. Otherwise, they wouldn't have voted for subsidized premiums in the first place. But then, they had no idea that cumulative losses for the eight-year period between 1993 and 2000 would total about $843 million. (It would have been worse if revenues hadn't exceeded costs by $720 million in 1999 and 2000. In the six years between ‘93 and ‘98, operating losses totaled some $1.56 billion.)

Repetitive loss properties account for about $200 million in claims annually, resulting in "a major disproportionate impact" on the program. And that, Rep. Bereuter has said, amounts to nothing more than a "federal handout."

In what the Nebraska legislator calls "a regional cross-subsidy," he says "American taxpayers are paying the cost for individuals who choose to live in high flood risk areas."

Rep. Bereuter once used the term "abuse" to describe policyholders who file claim after claim on the same flood-prone properties. But others stressed that most of those whose homes are damaged and lives disrupted by flooding more than once are hardly crooks.

Still, policy makers believe something needs to be done, especially since estimates are that within the next decade, 75 percent of the country's population will be living within 100 miles of the U.S. coastline where flooding is most likely to occur.