NAR continues to press for a delay of flood insurance rate increases. A Presidential Advisory Group was convened 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.
As a result, NAR wrote FEMA calling for further delay of the increases and called for a National Flood Insurance Summit with REALTORS, builders, lenders, insurers, floodplain managers and other key stakeholders to consider a long list of regulatory options outlined by the PAG that could help reduce the impact on homeowners and communities across the country.
In the letter, NAR stated that 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. 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 NAR says it is 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.