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Angel Calzadilla's Blog

By Angel Calzadilla | Agent in Fort Lauderdale, FL

Hit pause button on law to protect Florida’s economy

The following editorial is from 2013 Florida Realtors President Dean Asher, broker-owner with Don Asher & Associates Inc. in Orlando. It appeared in the Oct. 25, 2013, edition of The Orlando Sentinel:

Hit pause button on law to protect Florida’s economy

The Biggert-Waters Act passed by Congress last year resulted in unintended consequences so severe when they took effect on Oct. 1 that one of the bill sponsors asked her Congressional colleagues to delay implementation. Florida Realtors supports this effort from U.S. Rep. Maxine Waters, a California Democrat.

Hitting the pause button on legislation that is negatively impacting hundreds of thousands of property owners nationwide – and disrupting the housing recovery – is necessary for several reasons:

• The Federal Emergency Management Agency, which administers the National Flood Insurance Program, must complete an affordability study required by the act. FEMA allowed the Biggert-Waters law to take effect without even starting the study and making the required report to Congress.

• Biggert-Waters requires that FEMA issue the most accurate maps on which to base premiums. To date, FEMA has only remapped the East Coast. Yet property owners along thousands of miles of U.S. coastline are receiving notices of substantial premium increases.

• FEMA waited nearly nine months after Biggert-Waters was passed in July 2012 before eliminating rate subsidies for properties purchased after that date. Then the agency retroactively applied it – adding another layer of complexity to an already complicated law, and in effect, changing the rules in the middle of the game for many who bought their home over the past year.

The Biggert-Waters Act was an attempt to shore up the flood insurance program by moving it toward risk-based pricing. Nationwide, we all have a vested interest in stabilizing NFIP and keeping it solvent so the program can continue to help vulnerable homeowners during a catastrophe. Realtors and those who work closely with homeowners understand that, for this program to continue long-term, all property owners would eventually have to pay rates that adequately cover the flood risk on their properties, as long as the risk was accurately identified and fairly assessed on property owners.

But the subsidy phase-outs for existing policyholders were supposedly designed to be gradual and spread out over four to five years, if not longer, to minimize the impacts on homeowners. Yet that’s not what some Florida homeowners are experiencing – many are facing immediate, severe repercussions from the act’s unintended consequences.

Some long-term owners of modest properties in flood zones are worried the sharply higher premiums – up to 3,000 percent in some cases – will force them into foreclosure. Some current homeowners fear being “locked into” their property, unable to sell it in the future, because no one will be able to afford to buy it after learning what their new flood insurance premium would be.

While Congress considers delaying the Biggert-Waters Act, FEMA can take action to ease the effects on homeowners and offer rate relief by:

• Allowing for larger deductibles
• Allowing property owners to opt out of contents coverage

 Florida lawmakers and officials also can act to help citizens by:

• Urging the Division of Emergency Management to clarify the remapping process for each community in Florida and put the preliminary maps online
• Urging the state insurance commissioner to research any legal or regulatory issues that may keep private insurers from developing solutions
• Urging the Florida Cabinet to explore the feasibility of Florida opting out of NFIP

The growing real estate market is driving Florida’s economic recovery. To keep the momentum going, something must be done to redress the unintended consequences of Biggert-Waters. If not, Florida’s homeowners, residents and economy will suffer.

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