NAR Activity Update –
Reform of the National Flood Insurance Program
As a follow-up to our previous
update regarding the National Flood Insurance Program, NAR continues to press
for a delay of flood insurance rate increases. NAR continues to take a number
of internal and external steps to address the serious concerns raised by the
scheduled implementation of the NFIP reform legislation. Below please find
highlights of some recent actions NAR has taken, as well as an update on some
activities that were delayed due to the government shutdown. Additionally, we have prepared a letter for your
association president to send to your Member of Congress and United States
Senators. You can copy and paste the letter directly from this email or
use this
link to get a copy of the document
Please visit NAR’s
flood insurance web page to get the latest information including a comprehensive
toolkit of resources.
Recent
Actions by NAR
·
Convened
a Presidential Advisory Group to investigate the rate increases, find solutions
and reevaluate NAR policy based on the findings. The PAG spent several
days meeting with key experts and deliberating and has produced a report
consisting of 40 recommendations to provide for both immediate- and longer-term
rate relief. This report will be presented to President Gary Thomas later
this week.
·
Wrote
FEMA calling for further delay of the increases and in in the interim,
convene a National Flood Insurance Summit with Realtors, builders, lenders,
insurers, floodplain managers and other key stakeholders to consider a long
list of regulatory options, the PAG outlined, that could help reduce the impact
on homeowners and communities across the country.
·
Worked
to secure the support of the United States Senate on a “Dear Colleague” letter
urging immediate and longer term legislative action providing for flood
insurance rate relief. This letter to Senate leadership was signed by 18
Senators.
·
Asked
to testify at a hearing before the US House Committee on Financial Services on
October 9th. However, due to the government shutdown it was
cancelled and an alternative date has not been announced.
- NAR, in cooperation with the American Bankers
Association and the National Association of Home Builders, planned a flood
insurance forum for Members of Congress and congressional staff to educate
Congress on the coming changes required under the Biggert-Waters
legislation. The Forum was originally planned for early October but
was cancelled due to the government shutdown; an alternative date has not
been announced.
Dear
[Member(s) of Congress]:
We
are writing to express concerns over drastic increases in flood insurance
premiums as a result of recent changes to the National Flood Insurance Program
(NFIP). Provisions included in the Biggert-Waters Act of 2012 will make
flood insurance unaffordable for working Americans who have built to code and
followed the law every step of the way. We urge your support for a delay
for the purchases or grandfathering of homes under Sections 205 and 207,
respectively, until FEMA submits its congressionally mandated affordability
report under Section 237. The Agency should not be allowed to pick and
choose which parts of a law it will implement. The affordability study is
equally important and imperative to understand the full scope of impact, and we
urge its immediate completion.
The
Biggert-Waters Act of 2012 phases-in full-risk (actuarial) rates on non-primary
residences and businesses built before the first flood maps were established
(pre-FIRM). It also requires that the buyers immediately assume the full
actuarial rate when purchasing a pre-FIRM primary home. The
Biggert-Waters Act will also phase out grandfathering. This means that
properties that were built in accordance with all FEMA required building codes
and elevations at that time may now be deemed out of compliance, through no
fault of the owner, due to flood re-mapping. FEMA has begun the phase-out
for the pre-FIRM properties, including homes purchased after enactment, and
already we are seeing rate quotes for unaffordable increases and a chill in
many local real estate markets across the Nation. In some
instances, homeowners that have never flooded and built to code are facing
2,000-3,000% increases in annual premiums. This drastic increase in premiums
will cause property values and assessments to drop, bank mortgages to go into
default, local tax bases to erode, and economies to be eviscerated.
Ironically, while these increases were intended to make the NFIP solvent, it
could have the opposite effect if business and homeowners are no longer able to
afford the premiums and forced out of the program completely.
We
support a fully authorized, sustainable, fiscally responsible NFIP.
However, fiscal sustainability must be balanced with protecting the businesses
and homeowners who built according to code and have followed all applicable
laws. We understand and support the intent of the Biggert-Waters Act, but
the unintended consequences of the changes threaten to harm the very people the
program was designed to protect.
