Homeowners in high risk flood zones have already seen their premiums spike. And critics are concerned the increases will hurt property values and could lead to foreclosures.
The bill (S. 1846) would require the Federal Emergency Management Agency to complete an affordability study that shows how the premiums hikes will impact individual policy holders and the solvency of the National Flood Insurance Program.
Supporters of the bipartisan Home Flood Insurance Affordability Act claim it will fix flaws in the 2012 law and delay rate increases for up to four years.
“Providing FEMA with more time to investigate the potential impact on millions of Americans is essential to minimizing the unintended consequences of the Biggert-Waters Flood Insurance Reform Act,” says Camden Fine, president and chief executive of the Independent Community Bankers of America.
The National Association of Home Builders, National Association of Realtors, American Bankers Association and National Association of Counties also support S. 1846, co-sponsored by Sens. Robert Menendez, D-N.J., and Johnny Isakson, R-Ga.
The Biggert-Waters Act ended subsidized flood insurance rates for homeowners in many high risk flood zones. The higher unsubsidized rates are being phased-in over four to five years.
But anyone who purchases a home after Sept. 30 has to pay the full-risk annual flood insurance premium at closing.
“S. 1846 would delay the uncapped, point-of-sale increases until FEMA submits its affordability study,” says NAR president Steve Brown.
The Biggert-Waters Act requires FEMA to conduct an affordability study. But the legislators did not provide funding for the study.