Latest on Flood Insurance Time Bomb!

For a long time it has been obvious that National Flood Insurance has not kept premiums at a level to pay for the program.  Recent huge storm losses have sent it into the red.  Something has to be done.  Many of these claims are from innocent victims of climate change and some are from stubborn property owners who will just keep rebuilding homes, disaster after disaster as long as someone helps them pay to rebuild.  New building standards will ultimately help solve this problem, but in the meantime premiums will need to rise to stem the flow of red.

We, here in Oregon, are impacted by this most frequently in water intrusion from flooding.  The FEMA flood maps have changed recently and many homeowners find themselves surprised that they are now in a flood zone.  Most lenders will require their borrowers have adequate coverage to reflect the zone they are now in.  Some of these new zones come with rates that will stagger the strongest of us.  I know of one home on the market that now has an annual premium of over $8,000 per year.  You tell me if that property is even sellable?!?

These new guidelines, regulations and resulting premiums have created a firestorm.  Enough of a firestorm that our famous “do nothing congress” is actually considering doing something.  A bill asking for these rate increases to be postponed while an affordability study be done is currently in committee.  Yes, I know, being in committee can just be a place where a bill goes to die a quiet death.  However, there is huge pressure from the real estate, banking and homeowner communities to move forward on this.  Seems simple enough, but I am still doubtful.

The Oregon Association of Realtors has prepared a “Flood Insurance Toolkit” to help understand the situation.  If you would like more information, this link should overwhelm you with information:

http://oregonrealtors.org/.docs/pg/10862

Remember, this is NOW in effect.  The bill to postpone is only in committee.  The changes, rates and terms are ongoing pending a re-evaluation.

Keep smiling J

Fred Adams