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From Banking and Finance Law Daily, March 3, 2014

Waters announces progress of flood insurance bill; trade organizations express support

By Stephanie K. Mann, J.D.

Rep. Maxine Waters (D-Calif) has released an update on the progress of negotiations with Rep. Eric Cantor (R-Va) on the legislation to address rising flood insurance premiums. Despite overwhelming bipartisan, bicameral support, the Homeowner Flood Insurance Affordability Act (H.R. 3370) has faced roadblocks from leadership in the House of Representatives (see Feb. 13, 2014, issue of Banking and Finance Law Daily). The bill would delay by four years flood insurance rate hikes due to issues with the Flood Emergency Management Agency’s flood maps and require FEMA to complete its affordability study.

Progress. Waters said that important progress has been made on the bill. “We are taking this matter very seriously, and we are working in good faith to ensure this bill provides a comprehensive solution that will make flood insurance affordable for the hundreds of thousands of families who have been suffering,”said Waters. “I am hopeful that we can reach agreement on this legislation by next week.”

Organizational support. Over 190 trade organizations have signed on to a letter to all members of the House of Representatives. The letter expresses its strong support for the bill and urges the swift passage of the bill. “The legislation achieves the most pressing goals of the undersigned organizations by both settling real estate markets and protecting property owners who have played by the rules, while preserving the transition to true risk premium rates over a more gradual timeframe.”

Specific measures of the legislation that the organizations support are:

  • ensuring that flood insurance will remain affordable for those who have built to code at the time of construction;

  • removing the property sales trigger, which will bring back the certainty of accurate rates to the real estate market and treat both current property owners and potential purchasers equally;

  • increasing the home improvement threshold;

  • reimbursing policyholders for successful map changes;

  • creating a flood insurance advocate for homeowners;

  • preserving the basement exception;

  • addressing the problems relating to escrow accounts for policy holders; and

  • refunding policyholders who purchased pre-Flood Insurance Rate Map homes before FEMA could warn them of premium increases into the tens of thousands of dollars.

The organizations emphasize that while they do not support the continued subsidization of severe repetitive loss properties, they do believe that property owners who built their homes in accordance with the laws at the time must be protected.

MainStory: TopStory FloodInsurance

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