I was happy to read that on March 13, 2014, the United States Senate voted to approve the Homeowner Flood Insurance Affordability Act (H.R. 3370). The Senate acted to pass the bill as amended by the House to avoid the need for a conference committee to reconcile any differences. The new bill further reins in and holds the Federal Emergency Management Agency (FEMA) accountable for the Biggert-Waters implementation issues.

The bill repeals FEMA’s authority to increase premium rates at the time of a sale or new flood map. It also refunds the excessive premium to those who bought a property before FEMA warned them of the rate increase. The bill limits premium increases to 18% annually on properties that are newer and 25% for some older ones. The bill also adds a small assessment on policies until everyone is paying full cost for flood insurance. President Obama is expected to sign the bill into law when it arrives at the White House. NAR had urged a swift vote in the Senate.

A little more on the Biggert-Waters Reform that started all of this:

The Biggert-Waters Flood Insurance Reform Act of 2012 was designed to allow premiums to rise to reflect the true risk of living in high-flood areas. The law was passed to address a $24 billion deficit in the program which serves about 5 million people and had mounting losses, largely from Hurricane Katrina in New Orleans in 2005. Shortly after the enactment of the 2012 law, Super Storm Sandy pounded much of the Northeast coast causing another wave of insurance claims.

The law did not stipulate that rates would soar by more than 10 times but that is what happened to the surprise of lawmakers and much to the dismay of homeowners and small businesses. Lawmakers warned that such rate hikes could force many businesses and homeowners to sell their properties which in turn could lower real estate values and damage the economy. With so much at stake, Democrats and Republicans in Congress were forced to come together to find a resolution.

Author: Michelle Trimmell, RA, MBA
Source: realtor.org