Wednesday, March 5, 2014

Homeowner Flood Insurance Affordability Act Update

Posted by Tom Rooney
I just cast my vote on an important first step toward giving Florida homeowners some relief from a massive, unaffordable hike in their flood insurance premiums. This legislation is critical to maintaining growth in Florida’s housing market and its entire economy. I hope the Senate will follow our lead and pass this agreement quickly.
While this is a good first step, it does not solve the problem. What we need is a long term solution to make flood insurance more affordable for middle class families and small businesses in Florida and across the country. I am committed to working towards that goal.

Florida Realtors
The U.S. House of Representatives has just passed H.R. 3370, “The Homeowner Flood Insurance Affordability Act.” Among other things, the bill removes FEMA’s authority to increase flood insurance premium rates to unjustified levels at the time of a property’s sale. It also restores the grandfathering of properties which have been built to code. The bill is expected to go straight to the U.S. Senate (versus go to “conference” with the flood bill the Senate passed previously). If the bill passes the Senate without amendment, it will then go to President Obama for his signature. 

News posted by Brett Brown/Naples Realtor on Statement made by 
John M. Sebree - Senior Vice President of Public Policy | Florida Realtors®
The Voice for Real Estate® in Florida
Attached is NAR’s letter of support and here is a synopsis of what the House bill accomplishes:

· Reinstates Grandfathering - This bill permanently repeals Section 207 of the Biggert-Waters Act, meaning that grandfathering is reinstated. All post-FIRM properties built to code at the time of construction will have protection from rate spikes due to new mapping – for example, if you built to +2 Base Flood Elevation, you stay at +2, regardless of new maps. Also importantly, the grandfathering stays with the property, not the policy.
· Caps Annual Rate Increases at 15% – This bill decreases FEMA’s authority to raise premiums. The bill prevents FEMA from increasing premiums within a single property class beyond a 15 percent average a year, with an individual cap of eighteen percent a year. Pre Biggert-Waters, the class average cap was 10%. Currently (Post Biggert-Waters), the class average cap is 20%. The bill also requires a 5% minimum annual increase on pre-FIRM primary residence policies that are not at full risk. The updated legislation also states that FEMA shall strive to minimize the number of policies with premium increases that exceed one percent of the total coverage of the policy (e.g., 1% of $250,000 = $2,500).
· Refunds policyholders who purchased pre-FIRM homes after Biggert-Waters (7/6/12) and were subsequently charged higher rates
· Permanently Removes the Sales Trigger – This bill removes the policy sales trigger, which allows a purchaser to take advantage of a phase in. The new purchaser is treated the same as the current property owner.
· Allows for Annual Surcharges - This legislation applies an annual surcharge of $25 for primary residences and $250 for second homes and businesses, until subsidized policies reach full risk rates. All revenue from these assessments would be placed in the NFIP reserve fund, which was established to ensure funds are available for meeting the expected future obligations of the NFIP.
· Funds the Affordability Study and Mandates Completion – This legislation funds the affordability study required by Biggert-Waters and mandates its completion in two years.
· Includes the Home Improvement Threshold - This bill returns the “substantial improvement threshold” (i.e. renovations and remodeling) to the historic 50% of a structure’s fair market value level. Under Biggert-Waters, premium increases are triggered when the renovation investments meet 30% of the home’s value.
· Additional provisions: This legislation includes several other provisions including preserving the basement exception, allowing for payments to be made in monthly installments, and reimbursing policy holders for successful map appeals.
Stay tuned for word on when the US Senate will take up this bill.
by John Sebree

PS – Today was the first day of the 2014 Florida Legislative Session here in Tallahassee. President Sherri Meadows has been in town since yesterday morning. Just today she and I were guests of the Governor at his annual “State of the State” address. In his address he highlighted his desire to see the legislature begin to phase out the sales tax on commercial leases! Hope to see you all for GARD!