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REALTOR®: REALTORS® hail legislation to delay flood insurance rate increases

Wednesday, October 30, 2013

REALTORS® welcomed a bill introduced this week by a members of the House of Representatives and the Senate that would delay flood insurance rate increases which became effective Oct. 1. The legislation to postpone the federally mandated flood insurance rate increases stalled due to the government shutdown and the new rate increases alarmed many homeowners who saw their flood insurance rates skyrocket.

The National Association of REALTORS® (NAR) said the bipartisan 'Homeowner Flood Insurance Affordability Act' introduced on Tuesday in both houses of Congress will help millions of homeowners who are facing sudden and extreme increases in flood insurance premiums, which are an unintended consequence of legislation to reform the National Flood Insurance Program (NFIP).

"NAR supports the 'Homeowner Flood Insurance Affordability Act,' and urges its immediate consideration. We look forward to continuing our work with Congress to protect homeowners and taxpayers and create a responsible and sustainable flood program," said NAR President Gary Thomas in a statement.

The NFIP was originally created in 1968 because private insurance companies refused to provide flood insurance since the payouts were too large to be profitable. The NFIP is now more than $20 billion in debt to the U.S. Treasury, largely due to claims from Hurricane Katrina, which destroyed much of Louisiana and the surrounding area, and Superstorm Sandy, which caused severe flooding and widespread damage in the northeastern coast of the country.

Last year Congress passed the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12), which reauthorized the NFIP, but also made major changes to the insurance premiums many homeowners would pay, including the phase out of some federal subsidies. Under the new law, owners must pay the full-risk rate, the rate that accurately reflects the full risk of being flooded. Previously, the government subsidized the insurance of many homes or "grandfathered" them, so that the insurance rate was based on older flood maps showing lower risk. When it went into effect on Oct. 1, homeowners in some of the hardest hit areas saw their flood insurance premiums increase from $1,000 per year to as much as $10,000 or more per year.

The new bill delays further implementation of some rate increases in BW-12. This will allow the Federal Emergency Management Agency to complete an affordability study that was mandated by BW-12; propose targeted regulations to address any affordability issues found in the study; and give Congress adequate time to review those regulations.

Flood insurance is required in order to obtain a mortgage in many places in the Bay Area. When homeowners cannot obtain flood insurance, sales of homes are stalled, explained Carolyn Miller, president of the Silicon Valley Association of REALTORS®. "The 5-year reauthorization of the NFIP will ensure buyers will be able to obtain flood insurance required to obtain a mortgage, and the new legislation that delays the flood insurance rate increases will ensure that all homes pay a rate that fairly reflects their risk of flooding," said Miller.


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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