Addressing Flood Insurance Reforms in Florida
Realtors in Florida have joined their voices with others in asking Congress to discontinue some of the reforms that have been made to the nation’s flood insurance program. If you’re not familiar with these reforms, then it is probably because you don’t own property within the lines of federal flood-zone maps. As of this month, homeowners with flood insurance will be contending with massive premium rate hikes.
Dean Asher, president of Florida Realtors, spoke on the behest of Florida’s Governor Rick Scott to assembled members of the Florida Cabinet at the end of September. During his discourse, Asher warned of the “unintended consequences” which could wrought on property owners as a result of the Biggert-Waters Flood Reform Act of 2012.
Can the Florida Cabinet Take Action?
Asher requested that the Florida Cabinet take action and call on Congress to delay the implementation of the rate increases for newly purchased and grandfathered properties until Federal Emergency Management Agency (FEMA) had the opportunity to turn in the affordability study that is required by the Biggert-Waters law.
This study should have been submitted to Congress last year. However, Craig Frugate, the director of FEMA, has said that the affordability report could not have been completed in the allotted time period. Frugate also stated that he needed legislative authority to have postponed these rate hikes.
A Crushing Blow for Florida’s Economy
Governor Scott is worried about how these insurance changes will affect Florida’s economy, and rightfully so. These insurance rate hikes could have a crushing impact on a real estate market that was only just beginning to gain a stable footing following the recession.
According to the Asher, the state’s recovering real estate market has helped reinforce Florida’s own economic recovery. Looking at the most recent housing market data released by Florida Realtors, median sales prices for existing single-family homes continued to rise for what what marked the 20th month in a row.
Lacking Provisions for New Home Owners
“Unfortunately, the federal Biggert-Waters Flood Reform Act passed by Congress could bring that positive momentum to a screeching halt,” explained Asher. “I want to be sure that the general public knows that Realtors understand the need for solvency in the federal flood program. However, the Biggert-Waters Act contains severe unintended consequences that are harmful to Floridians as well as other states. We believe the reforms will have a detrimental impact on the entire economy of Florida, including existing homeowners and those who want to buy Florida properties.”
Many of sections in the Flood Reform Act offer “phase in” periods relating to these rate changes, but there isn’t a provision being offered for new property owners. Asher warns that without this provision, homeowners will get locked into their property and not be able to sell. Once potential buyers learn what the flood insurance premium is going to be, they won’t be willing to buy.