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No yuletide flood insurance fix

By Jay MacDonald · Bankrate.com
Friday, December 20, 2013
Posted: 6 am ET

Anxious coastal homeowners from Florida to Hawaii who were hoping for relief from onerous flood insurance premium increases wrought by the Biggert-Waters Flood Insurance Reform Act of 2012 will have to wait until next year when Congress reconvenes.

Last week, a unanimous quick-fix resolution in the Senate to delay the unforeseen negative consequences of Biggert-Waters for four years fell one vote short when Sen. Pat Roberts, R-Kan., objected on behalf of Sen. Mike Crapo, R-Idaho.

A rate increase storm surge

Last June, the U.S. House passed a resolution to block Biggert-Waters at the urging of the act's co-sponsor, Rep. Maxine Waters, D-Calif., and others on both sides of the aisle who were alarmed by the potentially devastating rate increases on modest older homes in their districts.

The intent of the legislation was sound; wealthy seaside mansions had been enjoying ridiculously low "subsidized" rates for decades, rates that the Katrina-battered National Flood Insurance Program, or NFIP, can no longer afford.

The problem is, the aggressive time-frame and processes to bring those rates up to actuarially sound levels stands to leave lower- and middle-income homeowners far from salt water with five years of annual increases of 20 percent or more, on average, pricing many out of their own homes. And because full rate resets kick in automatically when a property sells, home markets in those areas are being sucker-punched just as they're beginning to find their footing.

Hometown story: In Pinellas County, Florida, where I live, the median value of the 33,000 homes facing the rate hike is $132,000, their average square footage is 1,430, and two-thirds of them don't have water frontage or even a view of water, according to property appraisal records. Across Tampa Bay, the 20,000 homes being affected average 1,500 square feet and $102,000 in value, and 80 percent are not on the water. You can find a mansion in my ZIP code, but you'll log some miles to do so.

A call for something to be done

Understandably, my neighboring homeowners are upset, the Realtors here are livid, and congressional leaders such as Sen. Bill Nelson, D-Fla., are on board with anything that can stop this well-intentioned tsunami from swamping coastal property owners.

What might the new year bring? Initially, more of the same dithering seems likely. While U.S. Rep. Bill Cassidy, R-La., last week introduced yet another bipartisan bill, one designed to freeze any NFIP rate hikes until March 2015, the House, ironically, isn't the problem here -- it's the Senate.

Still, there's a glimmer of hope for 2014. The fact that the full reform fix bill currently before the Senate enjoys rare bipartisan support, with seven Republican and 16 Democratic sponsors, should bode well for its chances, especially during the election year.

Follow me on Twitter: @omnisaurus.

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