Monday, October 21, 2013

Flood Insurance Reform Act of 2012

An attorney who was recording documents this afternoon volunteered that new flood insurance rules and policies that are just now going into effect are having a detrimental effect on the real estate market.  The problem is that lenders require anyone whose property is in a flood plain to have flood insurance and the premiums for that are rising significantly, so much so that some applicants are becoming dis-qualified for mortgages they previously could obtain.

Last week at meetings of the Northern Middlesex Council of Governments (NMCOG) and of the Northeast Association of Realtors, similar concerns were expressed so this is likely a widespread and detrimental issue.

More information about the Flood Insurance Reform Act of 2012 is available on the FEMA website which also offers the following explanation for these changes:

In July 2012, the U.S. Congress passed the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) which calls on the Federal Emergency Management Agency (FEMA), and other agencies, to make a number of changes to the way the National Flood Insurance Program (NFIP) is run. Some of these changes already have occurred, and others will be implemented in the coming months. Key provisions of the legislation will require the NFIP to raise rates to reflect true flood risk, make the program more financially stable, and change how Flood Insurance Rate Map (FIRM) updates impact policyholders. The changes will mean premium rate increases for some—but not all—policyholders over time. Homeowners and business owners are encouraged to learn their flood risk and talk to their insurance agent to determine if their policy will be affected by BW-12.

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