With the passage of the NAR-supported Homeowner Flood Insurance Affordability Act in early April, REALTORS® were able to help bring property buyers and owners relief from exorbitant rate shocks and potentially inaccurate rate quotes that were causing uncertainty in the real estate market.
But, the story doesn’t end there. In fact, that is only the first half. Now, the new legislation must be implemented and there are both concerns and questions that remain unanswered.
Last week, I met with David Walker. He is a Director of the National Flood Insurance Program at the Federal Emergency Management Agency.
We discussed four critical issues that need to be implemented immediately because of their importance to our members and property owners.
Assume Policies of Property Sellers
The first issue dealt with immediate and desperately-needed rate relief to home buyers by preventing an immediate jump to full-risk premiums at the time of purchase. Buyers of property will be allowed to “assume” the policies and current rates of sellers. However, to deliver this relief, FEMA must act immediately to implement this provision. I asked the director when FEMA will issue the appropriate instructions and guidance to “Write Your Own” insurance companies allowing for the assumption of current rates and policies.
The second issue we discussed was the refund provision. It is vital that refunds to property owners who paid the full actuarial premium, between July 2012 and when this new legislation was passed, happen as soon as possible.
Establish Flood Insurance Advocate
The third issue we discussed was the establishment of an office of the Flood Insurance Advocate within FEMA to help consumers with concerns related to flood insurance rates, quotes and appealing flood zone determinations. This office is an idea created by NAR, and we were thrilled it made into the final passage of the bill. Now, we want to make sure the office is established and fully funded.
Create Technical Mapping Advisory Council
The final issue requires that FEMA implement a Technical Mapping Advisory Council. It is critical to ensure the flood maps are accurate. I asked the director if they have developed a timeline to re-establish the Technical Mapping Council so it can begin reviewing and improving the accuracy of FEMA’s flood maps.
As the meeting progressed, I was struck by the fact that Mr. Miller seemed to be that rare federal government official who had a grasp of how well-intentioned policies enacted in Washington, D.C. could have negative impacts on real estate markets across the nation.
The challenge, Mr. Miller said, is to implement the law as required by Congress, while mitigating the impacts on people who can least afford expensive flood insurance premiums – low and middle-income property owners.
The other good news coming out of the meeting is that the director told me that FEMA understood the urgency to implement these provisions and are working “aggressively” to develop and circulate the appropriate guidance and information.
Still from our perspective, this new legislation does not solve the challenges created by the reauthorization of the National Flood Insurance Program in 2012. It only gradually phases in rate increases; it does not prevent them from occurring.
Because this is still a continuing issue for our members and consumers, I recently created a President’s Advisory Group to develop further recommendations about how NAR should proceed as the changes are implemented. Our concern is simple; what will be the impact on the value and marketability of properties that require flood insurance at the new rate premiums?
I promise we will keep you updated on further developments as they come out of FEMA and the President’s Advisory Group. But, for now, I am pleased to report the good news that FEMA heard our concerns and is working hard to resolve them.
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