Flood Questions Continue

Breaking News:  The US Senate has just (3/13/14) passed the compromise Flood Insurance package which was recently passed by the House of Representatives. Now this goes to President Obama for signature…  Please make sure you check out the handouts from our legal luncheon for what this legislation entails.  It is NOT a four year moratorium! REALTORS are still advised to disclose and discuss this with their clients.

After returning from an informative Legal Luncheon yesterday, we had some outstanding Flood questions floating around… Most don’t have definitive answers yet (Berkshire REALTORS are asking all the right questions!) but we did get some helpful references for your clients.

Q. Do I need an Elevation Certificate to Get a Flood Insurance Quote?  

A.  Yes and no.  If you know the home is in a special hazard area and are trying to obtain an insurance quote through FEMA’s National Flood Insurance Program (NFIP), the property will need an elevation certificate to obtain a proper premium quote.  (you will also need a certificate if your seller plans to challenge the zone).  Private insurers have different requirements, most do not require an elevation certificate.  Speak with your insurance agent when applying for coverage or obtaining a determination of flood hazard area.

Homeowner’s Guide to Getting an Elevation Certificate:  FEMA says, “An Elevation Certificate is an important tool that documents your building’s elevation. If you live in a high-risk flood zone, you should provide an Elevation Certificate to your insurance agent to obtain flood insurance and ensure that your premium accurately reflects your risk. Obtaining an Elevation Certificate also can help you make decisions about rebuilding and mitigation after a disaster.”

Q.  Do Lenders have to accept Private Flood Insurance?  

A.  Most local lenders are already accepting Lloyds of London flood coverage, but we’re still waiting to  determine if they are REQUIRED to do so.  Private insurance coverage, which is many times thousands of dollars lower than NFIP coverage can be a viable option for buyers to discuss with the insurance agent and mortgage lender.  The Biggerts Water Act (Section 100239) contained a requirement that lending institutions must accept private flood insurance, including Fannie Mae and Freddie Mac loans.   We have asked NAR for their interpretation and have asked our local lenders to confirm that they are honoring the intent of the bill that requires lenders accept private flood insurance, as long as it is equal to NFIP insurance.  We will report back with the answers as soon as we have them. 

Here is actually what the Biggerts Waters Act bill summary says, “(Sec. 100239)… Directs Each federal entity for lending regulation by regulation to direct regulated lending institutions to accept private flood insurance as satisfaction of the flood insurance coverage requirement if the private coverage meets federal coverage requirements. Imposes the same requirement on the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).”  

Q. Does the homeowner have to pay all of the costs associated with appealing the decision?  

A. Initially, yes a homeowner has to pay, but ….  The Biggerts Water Act (Section 100246) provides that FEMA will reimburse the homeowner’s appeal expenses when successfully challenging a flood map. But, we have received a response from FEMA that stated, “We are responding as a representative of the Department of Homeland Security, Federal Emergency Management Agency (FEMA).  Many of the changes referenced by the Biggert-Waters Flood Insurance Act require programming changes and more clarity from Congress as to their intent.  At this time, costs accrued for obtaining an elevation certificate to submit in support of a Letter of Map Amendment request are not reimbursed.

Here is the link to the FEMA website to request a LOCA (Letter of Change Application) with detailed filing instructions.  Please note that a licensed surveyor will have to assist with the completion of the application.

We will keep updating the information as it becomes available – and please remember USE MAR’s GREAT DISCLOSURE!  We’ve uploaded it to the forms part of FlexMLS.

Great site for consumers: https://www.floodsmart.gov/floodsmart/