By Mark Blazek, President
Greater Chattanooga Association of REALTORS®
A few days ago, REALTORS testified before a House subcommittee on an issue potentially affecting more than 8.6 million property owners in more than 20,000 communities across the country. The topic? Flood insurance. More importantly – keeping flood insurance affordable.
REALTORS initially applauded Congress for its five-year reauthorization of the National Flood Insurance Program (NFIP). However, since the reauthorization, severe implementation problems threaten to undermine real estate transactions where flood insurance is required to obtain a mortgage. Some of the implementation problems include new NFIP rate structures that have caused serious confusion and hardship for property owners. Also, the Federal Emergency Management Agency (FEMA) continues to delay and miss deadlines for reporting to Congress its findings regarding the affordability of the rate changes. Even worse, the legally required transition to true risk rates has plagued consumers with increases in rates beyond what anyone imagined possible.
REALTORS support a proposed solution in the form of a bill currently in the House and Senate known. We are asking Congress for a “four-year time-out” to delay changes to the NFIP and support a bill is known as the “Homeowner Flood Insurance Affordability Act. This Act and would prudently defer rate increases until FEMA completes the affordability study mandated by law. REALTORS believe that the results of the study combined with additional time for Congress to consider the impact of these rate changes will allow for a thoughtful way forward. REALTORS are hearing of flood insurance rate increases beyond what anyone imagined possible, and we support the Act, which would create a system for targeted rate relief.
Also proposed in the Homeowner Flood Insurance Affordability Act is to create an office of the Advocate to investigate the flood insurance rate and mapping concerns. REALTORS feel the creation of the Advocate is a necessary provision in the Act. Otherwise, property owners and real estate professionals will be absent an effective avenue to pursue concerns regarding flood insurance rating errors and discrepancies.
In our perspective, the bottom line is that Congress should not let the rate increases go into effect until FEMA can submit its report so that Congress can understand and act on the full impact of these reforms. A delay in the newly-mandated NFIP rate increases will allow FEMA to determine more accurately how these rates will impact property owners as Congress planned, and give affected property owners more time to respond to higher rates. If fewer homeowners can afford flood insurance, in the event of future floods, taxpayers will spend more on federal disaster relief to owners of uninsured properties. Without flood insurance, homeowners located in flood zones could default on their mortgages. Such a situation would not be good for property owners or the nation’s economy.
We urge our members and consumers to speak up for keeping flood insurance affordable. Technology makes it easy to be heard by Congress. Visit www.gcar.net and click on the Call for Action image. Input your information and send an electronic letter to your Representatives and Senators. Help us help you and keep flood insurance affordable.