NORTH PUGET SOUND ASSOCIATION OF REALTORS
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Legislative Analysis of the Flood Insurance Changes

7/13/2015

 
On March 13, 2014, Congress amended the 2012 Biggert-Waters law with the “Homeowner Flood Insurance Affordability Act,” HR 3370. President Obama signed the bill into law on March 21, 2014.

•    Repeals FEMA’s authority to raise flood insurance rates at the time of property sale. 
•    Returns to allowing buyers to assume the seller’s current rates so the rate stays/transfers with the property, not the owner. 
•    Restores grandfathering so properties built and maintained to code in one flood zone are not rated in a higher cost zone, simply because FEMA corrects the mis-rating on a later flood map. 
•    Caps premium increases at 18% annually for new properties or 25% for the older ones. 
•    Refunds premiums paid by property owners in excess of rates under these amendments.

Originally, Biggert-Waters was supposed to gradually phase-out subsidized rates for about 20% of property owners – half would pay 25% more per year while the rest moved to the full cost for flood insurance upon the purchase of an older property. However, FEMA did not issue the new rates for 15 months, allowing many to buy the property before they could be warned of a retroactive rate increase. Others saw wildly inaccurate rate quotes well above the intended 25% increases that did not stand up to expert scrutiny. Most of these insurance rating discrepancies appeared to be the result of confusion caused by the scattershot implementation of the 2012 law.
The 2014 amendments should resolve most of the unintended consequences due to Biggert-Waters implementation issues. As amended, the law will still eliminate the rate subsidies, except that under these amendments, none of the 20% of owners will pay more than 25% a year -- even if someone buys the property. No more dramatic, upfront increases at the closing table. All increases will be capped and occur once a year when flood insurance is renewed. To avoid further borrowing from taxpayers, a small assessment is placed on all NFIP policies until property owners are paying full cost for flood insurance.

To prevent inaccurate rate increases in the future,
•    Requires technical review and certification of the flood insurance rate maps. 
•    Creates a flood insurance advocate for property owners to challenge faulty rates or maps. 
•    Increases funding to reimburse property owners for successful flood map appeals. 
•    Reduces rates based on flood-proofing or other alternative methods to elevating property. 
•    Provides for a higher deductible up to $10,000 before flood losses are covered by insurance.

If any affordability issues remain in 18 months, particularly for low value homes, non-profits, churches, or small businesses, FEMA is to report to Congress and propose additional solutions, like means-tested vouchers.
While the bill has been signed into law, FEMA must now implement the changes via rulemaking before property owners will see the rate relief and refunds. NAR is urging swift implementation of the changes.
Read more about the Biggert-Waters Law here


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    The National Association of REALTORS® is proud to present this new initiative as an opportunity specifically targeting multi-cultural, minority communities, toward building bridges to the holistic real estate community. This mentorship opportunity will help individuals learn the fundamentals of the real estate industry, foster education, empower serious consideration of real estate as a career path, and encourage and promote the development of generational wealth through property ownership.
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    Five new TV commercials begin airing last week. They're part of a fully integrated
    media mix, including new radio and digital audio, social media messaging, content
    partnerships, and of course, turnkey campaign logos and assets exclusively for use
    by the REALTOR® family. Visit ThatsWhoWeR.realtor to view all five commercials and to download campaign materials that you can use in your own markets. For easier sharing and personalization on social media platforms, download NAR's Photofy app and tap into a library of campaign imagery.

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    View Antitrust 101 for Real Estate Professionals, Housing Point: Fair Housing Act, and the Window to the Law Video Series, all from NAR Legal Affairs, and all free now through the Right Tools, Right Now program. for FREE or at significant discounts – right now – and is available to REALTORS® and REALTOR® Associations.


517 E. Fairhaven Ave - Burlington, WA 98233
Mission Statement: The North Puget Sound Association of Realtors advocates for Realtors and their clients,
and promotes the protection of property rights.

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  • Home
  • Calendar
  • Member Info
    • REALTOR Offices
    • Affiliate Offices
    • Board & Committee Chairs
    • Committee Information
    • Applications and Member Documents
  • EDUCATION
  • Government Affairs
  • Professional Standards
  • Contact

Legislative Analysis of the Flood Insurance Changes

7/13/2015

 
On March 13, 2014, Congress amended the 2012 Biggert-Waters law with the “Homeowner Flood Insurance Affordability Act,” HR 3370. President Obama signed the bill into law on March 21, 2014.

•    Repeals FEMA’s authority to raise flood insurance rates at the time of property sale. 
•    Returns to allowing buyers to assume the seller’s current rates so the rate stays/transfers with the property, not the owner. 
•    Restores grandfathering so properties built and maintained to code in one flood zone are not rated in a higher cost zone, simply because FEMA corrects the mis-rating on a later flood map. 
•    Caps premium increases at 18% annually for new properties or 25% for the older ones. 
•    Refunds premiums paid by property owners in excess of rates under these amendments.

Originally, Biggert-Waters was supposed to gradually phase-out subsidized rates for about 20% of property owners – half would pay 25% more per year while the rest moved to the full cost for flood insurance upon the purchase of an older property. However, FEMA did not issue the new rates for 15 months, allowing many to buy the property before they could be warned of a retroactive rate increase. Others saw wildly inaccurate rate quotes well above the intended 25% increases that did not stand up to expert scrutiny. Most of these insurance rating discrepancies appeared to be the result of confusion caused by the scattershot implementation of the 2012 law.
The 2014 amendments should resolve most of the unintended consequences due to Biggert-Waters implementation issues. As amended, the law will still eliminate the rate subsidies, except that under these amendments, none of the 20% of owners will pay more than 25% a year -- even if someone buys the property. No more dramatic, upfront increases at the closing table. All increases will be capped and occur once a year when flood insurance is renewed. To avoid further borrowing from taxpayers, a small assessment is placed on all NFIP policies until property owners are paying full cost for flood insurance.

To prevent inaccurate rate increases in the future,
•    Requires technical review and certification of the flood insurance rate maps. 
•    Creates a flood insurance advocate for property owners to challenge faulty rates or maps. 
•    Increases funding to reimburse property owners for successful flood map appeals. 
•    Reduces rates based on flood-proofing or other alternative methods to elevating property. 
•    Provides for a higher deductible up to $10,000 before flood losses are covered by insurance.

If any affordability issues remain in 18 months, particularly for low value homes, non-profits, churches, or small businesses, FEMA is to report to Congress and propose additional solutions, like means-tested vouchers.
While the bill has been signed into law, FEMA must now implement the changes via rulemaking before property owners will see the rate relief and refunds. NAR is urging swift implementation of the changes.
Read more about the Biggert-Waters Law here


Comments are closed.
    Pay My Dues
    MEMBERSHIP  MTG SIGN UP
    VISIT US ON FACEBOOK



    RPAC DESSERT AUCTION - LIVE
    The National Association of REALTORS® is proud to present this new initiative as an opportunity specifically targeting multi-cultural, minority communities, toward building bridges to the holistic real estate community. This mentorship opportunity will help individuals learn the fundamentals of the real estate industry, foster education, empower serious consideration of real estate as a career path, and encourage and promote the development of generational wealth through property ownership.
    Learn more!

    Picture
    Picture

    Picture
    That's Who We Are 2021 – Consumer Ad Campaign
    Five new TV commercials begin airing last week. They're part of a fully integrated
    media mix, including new radio and digital audio, social media messaging, content
    partnerships, and of course, turnkey campaign logos and assets exclusively for use
    by the REALTOR® family. Visit ThatsWhoWeR.realtor to view all five commercials and to download campaign materials that you can use in your own markets. For easier sharing and personalization on social media platforms, download NAR's Photofy app and tap into a library of campaign imagery.

    Picture
    Putting Members First  Right Tools, Right Now
    NAR: Right Tools, Right Now
    Access Free NAR Legal Videos
    View Antitrust 101 for Real Estate Professionals, Housing Point: Fair Housing Act, and the Window to the Law Video Series, all from NAR Legal Affairs, and all free now through the Right Tools, Right Now program. for FREE or at significant discounts – right now – and is available to REALTORS® and REALTOR® Associations.