NAR Presents Four Action Items to FEMA

By 2014 NAR President Steve Brown

With the passage of the NAR-supported Homeowner Flood Insurance Affordability Act in early April, REALTORS® were able to help bring property buyers and owners relief from exorbitant rate shocks and potentially inaccurate rate quotes that were causing uncertainty in the real estate market.

But, the story doesn’t end there.  In fact, that is only the first half.  Now, the new legislation must be implemented and there are both concerns and questions that remain unanswered.

Last week, I met with David Walker. He is a Director of the National Flood Insurance Program at the Federal Emergency Management Agency.

We discussed four critical issues that need to be implemented immediately because of their importance to our members and property owners.

Assume Policies of Property Sellers

The first issue dealt with immediate and desperately-needed rate relief to home buyers by preventing an immediate jump to full-risk premiums at the time of purchase. Buyers of property will be allowed to “assume” the policies and current rates of sellers. However, to deliver this relief, FEMA must act immediately to implement this provision. I asked the director when FEMA will issue the appropriate instructions and guidance to “Write Your Own” insurance companies allowing for the assumption of current rates and policies.

Deliver Refunds

The second issue we discussed was the refund provision. It is vital that refunds to property owners who paid the full actuarial premium, between July 2012 and when this new legislation was passed, happen as soon as possible.

Establish Flood Insurance Advocate

The third issue we discussed was the establishment of an office of the Flood Insurance Advocate within FEMA to help consumers with concerns related to flood insurance rates, quotes and appealing flood zone determinations.  This office is an idea created by NAR, and we were thrilled it made into the final passage of the bill.  Now, we want to make sure the office is established and fully funded.

Create Technical Mapping Advisory Council

The final issue requires that FEMA implement a Technical Mapping Advisory Council. It is critical to ensure the flood maps are accurate. I asked the director if they have developed a timeline to re-establish the Technical Mapping Council so it can begin reviewing and improving the accuracy of FEMA’s flood maps.

As the meeting progressed, I was struck by the fact that Mr. Miller seemed to be that rare federal government official who had a grasp of how well-intentioned policies enacted in Washington, D.C. could have negative impacts on real estate markets across the nation.

The challenge, Mr. Miller said, is to implement the law as required by Congress, while mitigating the impacts on people who can least afford expensive flood insurance premiums – low and middle-income property owners.

The other good news coming out of the meeting is that the director told me that FEMA understood the urgency to implement these provisions and are working “aggressively” to develop and circulate the appropriate guidance and information.

Still from our perspective, this new legislation does not solve the challenges created by the reauthorization of the National Flood Insurance Program in 2012.  It only gradually phases in rate increases; it does not prevent them from occurring.

Because this is still a continuing issue for our members and consumers, I recently created a President’s Advisory Group to develop further recommendations about how NAR should proceed as the changes are implemented.  Our concern is simple;  what will be the impact on the value and marketability of properties that require flood insurance  at the new rate premiums?

I promise we will keep you updated on further developments as they come out of FEMA and the President’s Advisory Group.  But, for now, I am pleased to report the good news that FEMA heard our concerns and is working hard to resolve them.

  1. Problem still remains for homes built before 1974 as well as second home owners.
    In our area, Manatee County, most homes on the water and in flood zones are built pre-1974 and predominately 2nd home owners or snowbirds. They are not getting
    any relief.

  2. Carmine Iaccarino

    Carmine Iaccarino with Berkshire Hathaway Fox and Roach Realtors in Media PA., A few months ago I had a contract to sell a Home which reqired Flood Insurance my Seller was paying $1,742, per year for the Insurance when the Buyer called to get the premium for ther flood Insurance, they were quoted about $8,000., for 250,000 in coverage with a 5,000 deductible, same coverages as the Seller at $1742.
    To say the least they cancelled the contract and the Seller took the property off the Market. I’m glad you see the urgency to fix this problem, but a word of caution, the new rates should not be increased as high as originally planned, that will impact all Real Estate transactions, and would just add more to the forclosure pool. Lets do something about this issue QUICK.

  3. Jeannette Requa

    The flood insurance premiums have drastically gone up in the area I serve. For example, on a 1800 sq ft rambler on 61 feet of Puget Sound waterfront , the current owners pay around $400 per year, A potential new buyer got a quote from the same insurance company thay my sellers have thier current insurance with and the quote was over $8,000 per year! This is course scared the buyer away and I am very concerned that we will not be able to sell this home until something is done. I hope NAR keeps the pressure on FEMA to work this out as if nothing is done the property values will decrease dramatically.

  4. Elevation Certificates in central Texas are costing home buyers $600 and up! These certificates are required by the insurance companies before they will even give a flood insurance quote. In some case the elevation certificates rate is higher than a full survey. Buyers out of pocket expenses will most likely increase due to this additional cost if a home or property shows to be in a flood zone. Again, the cost to purchase property is increasing which in turn is hurting the real estate market.

  5. I just read your article in the NAR publication and decided to make a

    We are greatly affected by the new flood ruling and are happy to hear that
    some of the impact has been delayed somewhat.

    I clearly understand that FEMA is broke and needs more money. I believe
    that much of their budget problem is caused when FEMA
    helps out when disaster strikes. I may be wrong but I think that much of
    the help is for individuals that were never insured in the Flood Program.

    I do not have a problem with helping victims of disaster but believe that,
    if our Government decides to assist, the funding for the non-insured should
    come from the General Fund and not out of the Reserve Fund of the Flood
    Insurance Program. It is not fair to penalize those of us that have been
    into the fund for years and never collecting and then have to pay for those
    that never contributed.

    Maybe I’m wrong in my assumptions but I wish you could check the facts to
    see if I am correct.

  6. Nancy Steinke

    Is there any information on the date the revised rates will apply? Just received my new rate, approximately a 400% increase. Have been advised to pay the additional $5,000 and then apply for the refund later, but hoping the government will be able to calculate the true amount by May 1. Any chance of this occurring?

  7. Lisa D Prinz

    My feeling is these concerns are not being dealt with in a timely manner at all! There are properties in my area not selling because of the flood zone! Many home owners do not hold elevation certificates and don’t feel the expense to hire a surveyor is justified to attract a buyer. Quite frankly, the expense is to much for many to consider obtaining the certificate.
    Keep up the good works!

  8. Richard D. Sterman

    Here on Oahu – beachfront land values are, on average, $1-2 million.
    And – the average construction cost is about $1 million.
    1. The $250k maximum coverage doesn’t even come close to “replacement value” …
    2. And – 2/3rds of the value of these properties is in just the land.

    I understand if there is a Government Backed Loan on the property – the Government will require Flood Insurance (sometimes at, or above, $20,000/year)… however, I believe that when the loan amount is less than 80% of the Land Value (by itself)… then the Borrower should have a choice to “Opt Out” of “Flood Insurance”…

    As an example – my own beachfront home has a Value of $2.9 million… my loan is only $600,000 … however – I’m still REQUIRED to have a National Flood Policy in place (now it’s $7,000/year – but will go up a certain % each year till it reaches the new higher premiums). If my house got knocked down – I could simply sell the land for $1.9 million… and I think paying off the $600,000 loan would be no problem. If I’m willing to take the chance – why force me to get Flood Insurance?

  9. fred yde

    Immediately after the resinscion of the Biggert-Waters Act, the National Flood Insurance reauthorization program, hundreds of flood plain area homes went up for sale as people who live in them saw a chance to get out from under a really unfair burden. We should not be bailing out FEMA on the backs of homeowners whose lenders require flood insurance but may have never filed a claim or whose property is not in hurricane zones. Such is the plight of many who live near smaller rivers and streams. There should be a tiered premium level for areas with modest or low claims vs areas that are prone to catastrophic claims. The people who do this work for the insurance companies already have the data to get this done and we should be hot on their tails to get it done.

  10. Jason Mazzurana

    Please Continue the Fight! If you or clients haven’t been impacted by the new provisions of FEMA count yourself VERY lucky. I’ve personally seen my home’s flood insurance go up drastically, lost transactions because of increased rates, and had to fight FEMA for 18 long months to get an in house error corrected. It’s not that I don’t appreciate the hard work and efforts of NAR however I’m very concerned that we’re just kicking the can down the road. Long term and permanent changes must be made or many of our flood plain homes throughout our country will begin to look like some of the lackluster areas of Detroit. Support your local, state and national associations of real estate and tell your legislators that we need their help.

  11. Chris Phelps

    FYI, The flood policies have been assumable all along. That was one loop hole they had attempted to close. We here in Florida, we have had sellers assign their policies for more than 5 years. The refunds should come immediately as should the new catastrophic fund fee on every homeowner policy in the US, should be implemented with all renews of policies since the law was signed. I’m sadden to see some Realtors bragging about how great this fix was for them. This “fix” will come back to bite us all in 4 years. Most of our area, SW Florida will be in flood and devalue everything at once when the new maps are complete. Sarasota county is scheduled to complete them by the end of 2014. The bumpy ride ain’t over yet!

  12. jeanette willey

    I agree with Louis Weil. I also believe that there should be a separate program for commercial property.
    I have a small home listed for $125,000 and the premium for the new flood insurance is over $4000 per year. The current owner has no mortgage balance and has eliminated his flood insurance BECAUSE HE HAS NEVER FLOODED!
    $400 a month for NFIP takes this home out of the market.

  13. Most of the provisions in the new bill will provide some good relief to property owners who were suddenly faced with outlandish flood insurance rates. I was hoping that one glaring exception to the above statement would have been included in the Four Action Items to FEMA, but it wasn’t. That is, the still exorbitant annual increases of 18% to 25%, depending on the age of the home. I was very disappointed that these high annual rate increases were included in this bill.
    Although it was stated in your FAQs that the annual increase would be more like 5% annually, there is no guarantee to that. As long as they can charge the highest annual increase, what is to stop them? It didn’t before this latest bill.
    In our state, property tax is capped at a 3% increase annually. In this economy, many folks complain that 3% is high, so you can imagine what they would think about insurance rates increasing 18% a year.
    With these 18% to 25% increases still looming in the future, this latest HFI Affordability Act isn’t going to be much help sellers who can’t sell their property. The flood insurance will still be too costly eventually. This annual increase of 18% to 25% needs to be drastically reduced.
    Yes the HFI Affordability Act is definitely better than the Bittert-Waters Act and I am thankful that NAR and Congress focused on the issue and have gotten this far with possible relief . Hopefully, instead of just passing a bill that is a band aid, it can be altered by lowering the still costly annual increases to truly be an effective relief to sellers and buyers.

  14. Sylvia P. Steeves

    Here in the St. Petersburg/Clearwater, FL area, a very large percentage of our land is waterfront and lower elevation property, and it was built on well before 1974 because that was where people wanted to be and still do. There are quite a few which are not big, expensive homes, and many of those people are still in their homes.
    Between the rising costs of healthcare, the cutting back on many people’s income, the rising costs of living, and now this, if one thinks that the foreclosure debacle was bad, just wait! Some may also think that if they are in an area where their elevation is not a problem, that they are immune, they will be surprised because there will be a tremendous ripple effect. There are many property owners from other parts of the county. Many people have relatives here who are being hurt, too. We have many people who can’t sell and need to. Many people would like to buy but won’t because of this problem. Why take the chance and buy if you don’t know if you’ll ever be able to sell it?

    The delay is a bandaid which won’t really solve the problem! We aren’t totally out of the woods with our foreclosures, and now this!! And now another huge blow to the economy! It’s pretty obvious that no one in Washington has ever been a Realtor! We see what a huge problem this is. Why can’t they? We are all rooting for NAR to bring some sense and reason to this issue!!

  15. Jeanne Dobson, Realtor with Keller Williams Flagship, specializing in the sale of waterfront properties in the Baltimore, Annapolis, MD area.
    Some residential waterfront areas along the Chesapeake Bay were recently remapped by FEMA as a VE flood zone. (Previously were rated AE) My first experience with this classification was just a few months ago. The quotes for mandatory flood insurance for a Bayfront home valued at $600,000 ranged from $29,000 to $35,000 a year. The cost to elevate the house to an approved level ranged from $75,000 to $100,000. The owner of the house cannot sell his home! This new rating affects a sizable number of homes in this area.

  16. Angela White

    sounds like my health insurance plan – seems like middle-class is taking it in the shorts again. since properties in flood zones are generally cheaper – these poor people are having to pay for evaluation and if flood insurance costs increase, their values drop. no way should it go from $400 to $8000 – that is ridiculous.

  17. Jim Wellman

    First of all the NAR should not have supported a knee-jerk reactive Flood Bill. It is sad that a lot of people lost their property and loved ones to floods. But it is even sadder that local governments can not make and enforce ordinances that say you can not build in an area that has a history of flooding. And if one still wants to live in bowl below sea level next to the Gulf, or on an island surrounded by water, or on a lake or river, that’s good but you know the risks…..YOU pay the premium.
    Secondly; the Federal Government strong-armed (some would say Blackmailed) local governments to go along with the Flood Bill. The letter sent to Townships was kind of like …..’it sure would be nice of you Townships to volunteer to help us, and if you don’t Federal Funds may be withheld.’
    And speaking of disasters…..I wonder if the NAR supported passage of the Dodd-Frank Act; another ominously powerful tool for the Feds?
    Lastly; the results of the meeting with the NAR president and FEMA sounded like the same old run-around with very few answers. I hope this was done by phone.
    If you would like to chat my e-mail address is

  18. Mark Estep

    You have an alternative to FEMA Flood Insurance. Go to
    Their rates are reasonable and provide the exact same coverage as a FEMA policy. I have not experienced any kickback or resistance from lenders when using this private insurer vs. FEMA policy. Many instances of FEMA quotes of $8k and private market quote of $1800 for identical coverage.

  19. I too have a listing in the “VE” zone. My present owner pays about $1,800/yr over and above his regular home owners insurance. The house has been there since 1940, through hurricanes, Super Storm Sandy, No Name storms, the amazing local flooding in 2010, blizzards, winds storms and it’s still standing and is doing just fine, thank you very much. It’s going to be impossible to sell because of the “VE” designation. It is not on the Atlantic Ocean or even the Narragansett Bay, but in a cove up near the head of the bay, with NO wave action. My seller paid the $500 for the elevation certificate, but it still sits in the “VE” zone, the “AE” is only 12 inches away on the other side of the house!

    Okay, I get that a new house should have to pay the cost of building in any of these flood areas. But a home owner that has a house that has been standing for over 70 years and paid into the flood insurance program since the inception, should this home owner or the buyer suffer the costs of this new law? My owner can’t sell it and he also can’t afford to keep it (he has to move because of a job change) What is he suppose to do? Unless the Government wants to buy it from him at the true market value, he is stuck. (But then again, right now true market value is zero, since no one wants to buy it because of the lingering flood insurance issues)

    Keep up the pressure, this needs to be resolved soon! Our little state of Rhode Island can’t handle anything else and we have way too many houses in this predicament.

  20. Bill Harris

    True grandfathering should be restored. If a house was built in a non flood insurance zone when it was built it should be grandfathered to not ever be required to purchase flood insurance.

  21. Lori Whitener/Enchanted Homes Realty Albuquerque, NM

    Here in the high desert at an elevation of 4888 ft, we are required to carry flood insurance in the Rio Grande Valley. Never mind that we supposedly get 9 inches of rain a year when we are in the 4th year of drought with an average of 4 inches of precipitation, we have the Rio Grande River which would be called a crick back east and that is it. Last flood of any significance was in 1890’s in Northern New Mexico. And we are in the AE flood zone? FEMA insists we are in a flood zone when in all actuality, the premiums are used to buffer the costs of rebuilding those communities along the coast and Mississippi River that flood year after year and rebuild year after year. Elevation certificates cost about $275. We have no rain, no water, our river is a joke and FEMA continues to require flood insurance on homes that will probably never flood. Quotes run from $1800/yr to as high as $4000/yr. I could see the need if we had a large body of water anywhere in our state but we don’t. FEMA’s maps are inaccurate and any questions are answered with the same response , “That’s the way it is”. Disgusting.

  22. Stephen Zachary

    Damage already done. This is not a fix but a delay. The properties on the market now can’t sell because of this. Buyer’s know what is coming, a policy they can not afford. Just waiting on a Elevation Certificate can now take months. Look for more foreclosures.

  23. Basil Burwell

    The government does not want to be in the insurance business and I believe they should not. However, the Biggers Waters Act has and will continue to have a dramatic effect not only on sales of new(er) and older homes, but also on the properties that are presently occupied and not for sale. Here in the Tampa Bay area, as in most of SW Florida, the amount of payouts from FEMA for flood property loss is significantly less than what we as property owners have paid into the system. I have read that the ratio is as high as $8 in for every $1 paid out. While the “study” and re-mapping is in process should there not be a calculation done of future premium rates derived from the prior payouts by FEMA? If the government is to remain in the insurance business then it only makes sense to make the rates for FEMA policies equitable.

  24. Vickie Chambers

    It appears to me the original intent of the National Flood Insurance plan (1968) has been lost over the years, as often happens. Years ago it was meant to ease homewowners (especially moderate to low income) with mortgages into making choices of where to live. Payoff the mortgage and no lender would require insurance premiums and owner can take their own risk, and/or rebuild or raise the home out of harms way. But what it turned into was a building boom on any river, stream and beach and subsidized insurance for luxury homes. I truly am sad at this point, that a government attempt to help a situation, has bloomed into an entitlement issue for the affluent. Yes, insurance companies are charging exorbitant prices, taking advantage of the foolish building practices fueled by buyer demand. But a correction must be made – in this system and many others! Do you really want to keep putting reality off on our children? 5-years to make a correction that should have been better orchestrated over the past 20-40 years is ridiculous, but what truly are our choices if we want a more fiscally sane world for our children?

  25. Elizabeth Mundy

    This is just another ploy by the banksters and government to steal more housing away from the citizens! Sorry, I’m going to be politically incorrect here, but NAR is just another organizational lapdog for the government. There’s a bigger picture going on here than meets the eye.

  26. Eddie

    The problem is, as usual, Washington not understanding the full impact of their actions on the citizens. Washington sees it, “there is a 30 billion deficit caused by flooding” so the take a federal program (nfip) that worked fine for many yrs and usually ran a surplus and totally ruined it due to a couple “outlier” storms that we may never see again for many years. While it is true that flood insurance premiums need to go up some in order to pay back the 30 billion of tax payer money, but it has to be done in a “measured” way over time so as not to hurt the citizenship that are effected, but “measured” actions is something the government does not do well. FEMA and all involved agencies and local governments need to work together to come up with a “measured” program that will not harm property values and destroy peoples lives.
    To me a successful program would look like this:
    1) Grandfather existing properties flood zones while adding modest increases in premium

    2) allow assumption of the grandfather status to new buyers of those homes

    3) provide assistance to local governments to create dunes and levy projects that would mitigate future flood damage and assess reasonable premiums to homes within those areas and create a “special zone” classification for them on the FEMA map

    4) require all new homes in the various flood areas to build to the new flood standards and let the insurance premiums be reasonable since the new standard homes have mitigated the chances of substantial flood damage.

    5) Lifetime Cap the maximum insurance premium per zone and when the National Insurance fund is replenished, reduce premiums on everyone going forward.

    I am sure I have left some things out and invite any other suggestions but the thrust of my comment is to “act with care and measured steps to achieve the necessary goals”.

  27. Carol Middleton

    I would think if someone owns water front property they understood the risks of flooding. When they made the choice to purchase that property they knew they would have to pay flood insurance. All insurance premiums increase when the number of claims increase it is the collective premiums that pay the claims. Do or could premiums be based on the historical records for flooding in any given area? As for the individuals complaining that own million dollar plus homes get over it pay the bill.

  28. Arlen Crotchett

    I support Jim Wellman in his comments. If a person wants to build in a flood zone, and it’s permitted by the local ordinances, it seems reasonable for that person to assume the actuarial risks manifested in insurance premiums. A homeowner living in a flood zone but having never experienced any flooding is another issue and their rates should reflect the more limited risk. However, a homeowner who has previously experienced flooding of their property know the risk of living in the flood zone and pay insurance rates reflecting the potential for another flood. If you live in a bowl, the risk continues to be high for another flooding of the property.

  29. Thomas Lawer

    Let’s just work to get the government out of the flood insurance business. There is a huge amount of capital looking to be deployed to make decent returns. There is not, and has never been, a reason for the government to be in this business; not surprisingly, the government’s role in this business has created fiscal problems. I agree with most folks; get the government out of the business, and let the private sector work.

  30. Thomas Lawler

    The goal of any policy should be to get the government out of the flood insurance business. It never should have been there in the first place.

  31. I recently experienced the unfortunate situation the new law and HIGH cost of flood insurance this new law has caused. I had a house under contract across the street from a creek, the current homeowners had flood insurance and was paying $400.00 a year for the coverage. Because of this new law, before the new buyer could even get a quote we had to have a flood evaluation certificate (survey) completed which cost the buyer $375.00 – was going to be $575.00 but luckily we found it cheaper just to get the quote. He took this certificate to the same INS company the current seller had the flood insurance with that was paying $400.00 a year and the INS company said that they would have to send it to FEMA, that they could not quote flood insurance anymore and that it would take 4-5 days to come back. Once we waited- it came back with a quote of $2900-$3400yr a year for just flood ins. $2900 if the lender wanted it insured for the amount of the loan and $3400 for total replacement cost. Needless to say this killed the deal. The seller had to lower the price of his home $18,000 to try to get another buyer on a $83,000 house to start with. Who wants to pay $300 or more a month in flood ins? No one. This is sad and it’s going to affect a lot of homeowners and buyers and it’s going to make it hard if not almost impossible to move property near a creek or river. These flood insurance prices are ridiculous and out the roof. We need to get this law fixed and fixed fast. Homeowners and buyers should not have to suffer at the government’s expense!

  32. As a realtor and broker in NJ. Our property values have dropped not just from the impending rise in flood insurance premiums, but because of the uncertainty.

    The Grimm-Waters Act only slows down the exorbitant rise in flood insurance premiums. If your actuary rate is $10K or $20K or more your flood insurance premium will get there at an annual increase of 18% increase COMPOUNDED annually.

    Please join our group to Stop the Exorbitant Rise in Flood Insurance Premiums and fix the flood maps.

    below are a few videos about our group. CBS National news coverage of our rally.

    Video NYC rally, 1,100 people attended. Fast forward one minute mark.

    Sen. Menendez Flood Insurance Affordabily Act press conference thanking George Kasimos for Stop Fema Now’s efforts. Fast forward video to 1:00 minute mark. I am the tall guy next to Senator Cory Booker. Newscast of our group after fighting the flood maps. We had an 80% rollback in V zones and elevations.