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Nancy Starczyk: Flood insurance problems

Posted: March 26, 2014 2:00 a.m.
Updated: March 26, 2014 2:00 a.m.

 

The United States Senate recently approved the Homeowner Flood Insurance Affordability Act, the next to final step needed to restrain rising flood insurance premiums that delayed or killed an estimated 40,000 home sales nationwide.

In a rare show of bipartisanship, the Senate on March 13 voted 72-22 to approve House Resolution 3370.

The quick action by the Senate to pass the bill as amended by the House avoided the need for a conference committee to reconcile any differences. The new bill further reins in and holds the Federal Emergency Management Agency accountable for issues that arose as it implemented the Biggert-Waters act, which attempted to reform flood insurance.

“Home buying is complicated enough without introducing new variables like inaccurate rate quotes into the process,” said Steve Brown, 2014 president of the National Association of Realtors. “Combined with the provisions establishing a new flood insurance advocate for homeowners, these bill enhancements will resolve most of the unintended consequences due to Biggert-Waters implementation.”

As passed, the bill repeals FEMA’s authority to increase premium rates at time of sale or issuance of a new flood map, and refunds excessive premiums to those who bought a property before FEMA warned them of the rate increase.

The bill limits premium increases to 18 percent annually on newer properties and 25 percent for some older properties. To make up the difference in program revenue, the bill adds a small assessment on policies until property owners are paying full cost for flood insurance.

As amended by the House, the bill will not add to the debt over 10 years, according to the Congressional Budget Office. Compared to prior efforts, that represents a more balanced and measured approach that will not undermine local housing markets.

President Obama is expected to sign the bill into law when it arrives at the White House. Realtors nationwide had urged a swift vote in the Senate.

Nancy Starczyk is President of the Santa Clarita Valley Division of the Southland Regional Association of Realtors. David Walker, of Walker Associates, co-authors articles for SRAR. The column represents SRAR’s views and not necessarily those of The Signal. The column contains general information about the real estate market and is not intended to replace advice from your Realtor or other realty related professionals.

 

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