On June 29, 2012, the Senate and House passed the Flood Insurance Reform Act as part of H.R.4348, the Surface Transportation Conference Report. President Obama signed the measure into law on July 6, 2012. This new law created a 5-year reauthorization of the National Flood Insurance Program (NFIP), but severe implementation problems threaten to undermine real estate transactions where flood insurance is required to obtain a mortgage.
- Renewing and strengthening the long-term viability of the federal flood insurance program;
- Maintaining funding to update and improve the accuracy of flood maps, which are used to determine which properties require flood insurance; and
- Including comprehensive coverage for properties including non-primary residences and reforms to ensure "full risk" premiums for properties with repetitive insured losses.
A 5-year reauthorization of the NFIP, including the gradual removal of subsidies, was required to maintain access to affordable flood insurance that is required but not available in the private market. Without the NFIP, property owners would have to take their chances and go without insurance or rely on taxpayer-funded disaster relief after the next major flood. However, FEMA’s implementation of the removal of the subsidies was problematic, at best. Additionally, there is compelling evidence that the insurance companies are overcharging the property buyers, forcing them out of the program and the existing owners potentially into foreclosure.
NAR has also supported the “Homeowner Flood Insurance Affordability Act” (S. 1610/H.R 3370) and its amended version passed by the House on March 4, 2014, which address the implementation problems posed by the Biggert Waters law. The Senate must now pass the amended version before the bill can become law. Visit our legislative analysis page for more detailed information about the latest updates on flood insurance legislation.
NAR invites those who have recently received a significant rate quote increase to fill out NAR’s survey and include any supporting documentation possible.