Flood insurance relief bill will keep subsidized rates in place when homes change hands

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A flood insurance relief bill that sailed through the House of Representatives Tuesday would keep government-subsidized rates in place when homeowners sell their primary residence, removing a major impediment to home sales in flood-prone areas.

Real estate industry groups cheered Tuesday’s 306-91 House vote on the Homeowner Flood Insurance Affordability Act (HR 3370), which also keeps in place protections for properties grandfathered in to subsidized rates.

The bill has bright prospects in the Senate, with sponsors of a competing bill agreeing to take up the House legislation, the Tampa Bay Times reports.

The National Association of Realtors said homeowners who are experiencing financial hardship from premium increases instituted last year will “feel immediate relief from this bill, which ensures a slow and steady phase in of risk-based increases.”

The bill is an attempt to address impacts of the Biggert-Waters Flood Insurance Reform Act of 2012, which was aimed at restoring the National Flood Insurance Program to solvency. The program is more than $24 billion in the red because flood insurance premiums have not been sufficient to cover claims by owners of flood-damaged homes.

NAR says that since passage of the Biggert-Waters reforms, about 40,000 home sales were either delayed or canceled because of flood insurance rate increases and confusion over rates.

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Supporters of the House’s flood insurance relief bill say FEMA will still be able to raise rates to address actual flood risks, but increases will be phased in more gradually. Rate increases will range between 5 and 15 percent per year on average, with a hard cap of 18 percent per year, the Times reports. Source: tampabay.com.