Should We Respond to NAR's Call to Action on NFIP?

Featured @ Club Chaos

Hi Mike, I don't live in an area prone to flooding.  I can't help but feel for folks who are born and raised in areas that now can't be insured.  Should families loose their entire lives simply because they were born and raised in an area that floods?  Would you want to pick up and move away from everything you know and love?  You say people who insist on rebuilding.  Isn't it possible that some of these people feel they don't have a choice?  I would support NAR as NAR is doing what they are supposed to do, and that is help our industry.  I feel the real estate industry drives the economy and when real estate isn't selling, it hurts everyone.  It's a complicated issue.

I too was hesitant about that call to action.  I come from a different viewpoint. I live on the Idaho Oregon border, which is mostly the Snake River.  My house is about 100 feet from the river.  We have been repeatedly victimized by flood insurance over the 32 years we've lived in the home (I know I'm a lousy realtor moving-wise).  We are close to paying the loan off and one benefit will be not having to pay for flood insurance.  It costs around 1200 a year for our two houses both of which sit above normal flood range but within FEMA's flood plain.  We are fine with self insuring having been through two actual floods.  Water was in our basement and in our warehouse which does sit ludicrously low.  We don't use the basement (house should never have been built with one).  You just plan for high water when it happens. 

The one time we attempted to use FEMA funds two decades ago it was exactly the same process as applying for an SBA loan .  They turned down our $3500 application to build a dike, so we built it ourselves for $800.  Then at taxpayer expense, they sent a dude out to our house to ask us why we hadn't pursued the application further? 

They keep expanding the reach of flood insurance too.  I agree with you  the whole program needs to be examined and fixed.

Hi Mike,  Many areas which receive the " flood plain " designation are pretty far from any real threat.  I get uneasy when we decide policy on proximity to ourselves or on probability of an event. 

Is there an NAR Board that decides what position to take on certain issues?

Mike,

"Is it good policy to renew NFIP? "

A greater question is, was it a good policy to create NFIP IN the first place?

There was flood insurance before NFIP nationalized it!

"Is it a good use of taxpayer money?"  It never was, but now we have Canada's problem, How do you reprivatize a government fiasco? 

All mortgages that required flood insurance are now or about to be in default! Homes in flood plains can't be financed!

Wait until after the 2014 election when we face the same problem with CANCER INSURANCE! Hart insurance if you're over 35!

Today we let homes drown later we let people die.

Socialism always breaks down, always fails!

But, we need to renew NFIP until we can again create a private alternative!

Bill

Mike,

The problem is only going to get larger. FEMA flood maps are in the process of being updated. I suspect that a lot of properties not currently in a flood zone are going to be surprised when the new maps are complete.

Rich

Mike, I live in an area where the ability to purchase flood insurance is critical for the housing market.  Premiums are based on the flood zone and associated risk of buying in that zone, so we are acutely aware of the risks.  Most of our housing stock was constructed prior to the creation of flood maps and zoning, something that is taken into account by FEMA. 

If a structure suffers flood damage of  50% or more, the owner is required to raise the structure to the base flood elevation (BFE) in order to continue to insure the property (and this is not just in NOLA, but in any of the 20,000 communities that participate in the NFIP).  Additionally, there are rules for new construction in flood zones that require the lowest floor be built at or above the BFE to minimize the risk of loss.  Buildings substantially damaged by flood, rebuilt to NFIP construction standards, have less risk of damage from future flooding and are eligible for NFIP coverage at a reduced rate

Flood insurance is not just an issue in coastal areas, but also for anyone who lives close to a lake, river or stream.  The risk may be small in some of these areas, but the NFIP uses a 1% annual chance of flood when rating areas to ensure that the maximum number of communities participate in the program.  The collection of premiums from participating communities (i.e., homeowners) helps to reduce/offset the costs of disaster relief when a flood happens.

From the FEMA library:

Funding for the NFIP is through the National Flood Insurance Fund, which was established in the Treasury by the 1968 Act. Premiums collected are deposited into the fund, and losses, and operating and administrative costs are paid out of the fund. In addition, the Program has the authority to borrow up to $1.5 billion from the Treasury, which must be repaid along with interest.

Also from FEMA:

People who receive some forms of federal flood disaster assistance are required to purchase flood insurance if they live in a Special Flood Hazard Area. Federal law requires people who receive assistance through SBA disaster loans or individual and family grant programs to purchase and maintain flood insurance as a condition of receiving assistance. If they don't, victims may be ineligible for some assistance programs in the future.

Interestingly enough, after the 2000 wildfires in Montana, residents who lived in communities that participate in NFIP were encouraged to purchase flood insurance because of the risk of rain and melting snow washing away soil, sending water flowing across burned and barren land and causing streams to overflow their banks and flood homes.

Also of interest is the fact that there are multiple flood plains in and around Athens, GA.  Would you leave these people your neighbors without the ability to insure their homes or should they all be forced to relocate?

Practically, there is no way to avoid dealing with the program.  There are too many communities, families and homes that are already located within flood plains to eliminate the program or the risk.  The best solution is mitigation and I think that FEMA is doing a good job of that.  (Do you have any idea how hard it is for a NOLA girl to say anything nice about FEMA???)

The only reason that the NFIP has not been extended for a longer period of time is the fact that elected officials keep adding unpopular amendments (that have nothing to do with flood insurance) to the bill that are causing it to be delayed.

Just my 2 cents.

Congratulations this post is now featured in the Silent Majority Group of Active Rain.

It is simply yes you should reply to the NAR call for action. 

Saunders - This issue is new water (pun intended) for me.  Read the post and subsequent comments.  Honestly, I'd have to be more read or experienced on the matter to create a relevant opinion on the matter.  If nothing else, your post will drive me to do my own digging.

C'mon Mike!  You are ENTITLED to that money!

Mike, this is  a controversial topic. Was it a very smart idea to rebuild the lowest lying properties in LA?

NAR has TOO MANY CALL to ACTIONS that are MEANINGLESS so that when/if there is an ISSUE of VALUE to the real estate industry * they are crying WOLF!!!  Just because they have my e-mail does not mean that they have my SUPPORT!!!