Federal flood insurance law changes – no more policy subsidies
Pecan Manor lake properties with mortgage may also be required to buy flood insurance
By Elsa Maxey
Organized by the Greater Fort Bend Economic Development Council (EDC), a presentation by Carlton Watts from FEMA Region 6 before an audience of elected officials, city planners, realtors, property developers, mortgage lenders and assorted others on Monday tells about a new federal law passed by Congress with changes to the FEMA flood insurance program.
The act, Biggert-Waters Flood Insurance Reform Act of 2012, changes flood insurance premium rates by eliminating the government subsidy. Some in Fort Bend have taken advantage of obtaining a subsidized policy for flood insurance coverage and in October 2014, these policies, which according to FEMA, have not paid the full actuarial rate and are not reflective of the true risk of flood to that property, will no longer exist.
But, “the thing that Carl kept leading back to is there is some possibility of changes. Judge (Bob) Hebert was in Washington last month and there is a probability that the grandfather clause is going to stay in,” said Fort Bend County Commissioner James Patterson after the meeting at the University of Houston – Sugar Land Brazos Hall. “If the grandfather clause stays in, that would mean that the people in the zone AE could be grandfathered as long as they kept their insurance up to date.” Zone AE is defined as an area that will be inundated by a flood event with a one percent chance of being equaled or exceeded in any given year.
Patterson also told the “Star” that in Pecan Manor, for example, “all the people own the lot all the way to the middle of the lake, so their mortgage company is going to automatically say that they have to have flood insurance even though their house may be 12, 13 feet above the flood plain.” Commissioner Patterson said that the bottom of the lake or “in the lake” itself is the flood plain. That means that home owners with mortgages living on those properties will need to prove their structure is not affected to their mortgage lender, which will otherwise require flood insurance by law.
Essentially, the flood insurance maps are key as is elevation of a structure on a property, not the property. The advice to Fort Bend residents, “they should contact their flood plain administrator” in their city or the county engineer if they live outside the city limits to “get further information and ask what are the ways they can mitigate,” said commissioner Patterson. In particular, he shares how the Fulshear area, once in his precinct, had structures in Vintage Creek that were wiped out more than three times by flooding. The structures in a place like that “need to be done away with and not be rebuilt,” he said.
The Flood Insurance Reform Act of 2012 calls for FEMA to make changes to the way the National Flood Insurance Program is run with provisions requiring the program to raise rates to reflect true flood risk and make it more financially stable.
Flood Insurance Rate Map updates will impact policyholders and changes may mean premium rate increases for policyholders over time.
The FEMA run program has been walloped by major storms during the past 10 years, according to reports. Watts also told local meeting participants that the National Flood Insurance Program underwent a $16 billion debt on Hurricane Katrina. Additional information indicates that after Sandy, the program will be $25 billion in the hole, a hefty debt that taxpayers will collectively cover as losses incurred in the past, present, and future.
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