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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  • 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 2021 DUES
    VISIT US ON FACEBOOK

    January 28th General Membership & Awards of Excellence Presentation

    Register


    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.

    Picture
    Putting Members First  Right Tools, Right Now
    In light of the challenges presented by COVID-19, and its impact on the real estate industry, NAR is taking steps to support members through these uncertain times. The Right Tools, Right Now  initiative, which was activated once before in 2009, makes new & existing NAR products and services available for FREE or at significant discounts – right now – and is available to REALTORS® and REALTOR® Associations.
    Picture

    COVID-19 Coronavirus RESOURCES & LINKS
    WA REALTOR FAQ'S

    COVID-19 OFFICE
    PROCEDURE & PROTOCOL

    WR COVID-19 RESOURCE PAGE


     UNEMPLOYMENT FAQS

    SBA FAQS
     
    WR/NWMLS FAQS
    (Updated 4/1/20)

     
    SIGN UP FOR NAR TELEHEALTH BY MAY 31
     
    LATEST FLASH SURVEY (4/9/20) IS AVAILABLE
     
    BEST PRACTICES FOR
    VIRTUAL MEETINGS

     
    WA EMPLOYMENT SECURITY DEPARTMENT INFO ON COVID FINANCIAL ASSISTANCE
     
    STUDENT LOAN RELIEF
    FOR STUDENTS AND PARENTS

     
    MORTGAGE HELP FOR HOMEOWNERS
    IMPACTED BY THE CORONAVIRUS

     
    IRS DEADLINE FOR FILING & PAYING TAXES MOVED FROM APRIL 15 TO JULY 15
     
    MANAGING STRESS, FEAR & ANXIETY
     
    SMALL BUSINESS DISASTER RELIEF

    ATTORNEY GENERAL WARNS
    OF COVID-19 SCAMS

    NAR GUIDE FOR LOCAL ASSOCIATIONS

    NAR GUIDE FOR REALTORS

    CORONAVIRUS EMERGENCY LEGISLATION

    FHFA IMPOSES MORATORIUM
    ON FORECLOSURES

    GOVERNOR IMPOSES MORATORIUM ON
    EVICTIONS AND DELAY IN TAX COLLECTIONS


    COVID-19 / Coronavirus Precautions are being taken from the National Association level, down to local offices. We will be working from our homes for the duration, and are both going to be available by email. ​


    2019 RPAC Major Fundraiser Aboard the Explorer 5!


    2018 Installation & Awards Banquet Photo Slideshow!