Welcome to the Flood Zone! A nationally distributed resource for those interested in flood zone issues, land surveying, real estate, history, and edu

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Welcome to the Flood Zone!

A nationally distributed resource for those interested in flood zone issues, land surveying, real estate, history, and educational opportunities. If you no longer wish to receive this newsletter, simply click the unsubscribe link in the footer of this message.

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Jim Headshot

Message from Jim

The “Elephant in the (Living) Room” is an English metaphorical idiom for an obvious truth that is either being ignored or going unaddressed. So, what exists in many real estate transactions as an obvious problem or difficult situation that many do not want to mention? My vote, the Flood Zone!

With the challenges presented by climate change and rising sea levels, biased media coverage, political agendas, and generally inferior knowledge about the National Flood Insurance Program, the “Elephant” must be firmly acknowledged as part of every real estate transaction. With education, fears will diminish and real estate values will be appropriately adjusted, resulting in improved accountability and awareness among consultants and homeowners. Remember, flood risk is two-fold: perceived risk based on the flood map, and actual risk based on Mother Nature. Flood will always bring higher emotion for everyone who believes only one type of risk exists.

Here in Maine, in Section V. General Information of the Seller’s Property Disclosure, it asks, “Is the house currently covered by a flood insurance policy?” We were very pleased to see a flood-related question appear on this form, but is this a good question alone, with no other supporting information? Let’s take a closer look at the flood evaluation process required by the program.

The “being in the flood zone” process starts with a horizontal flood determination (no elevations) from a national flood determination company, land surveyor, or appraiser rendering an opinion that the improvements being used for loan collateral scale in a Special Flood Hazard Area (Zone A or V) per FEMA’s Flood Insurance Rate Maps, meaning flood insurance would likely be required. Simple enough, right?

Unfortunately, it is not that simple. Even if scaled in a high-risk flood zone, a seller can answer “no” to this disclosure question if he or she purchased with cash, has no mortgage, has an outstanding federally backed mortgage of $5,000 or less, has a private mortgage, or in some situations, had portions of on-site improvements excluded from flood coverage due to acceptable loan to value ratios. Just because a flood insurance policy was not mandatory, does not mean the structure is not at risk.

In my opinion, seller disclosure should include a handful of questions that better address buyer or investor risk, and is worthy of having its own section in disclosure similar to water supply, waste water disposal, heating, and hazardous materials, since a flood’s ability to impact value and life safety are equal to or greater than any other components listed on disclosure. The National Association of Realtors should welcome this strategy, as it would create the bridge that best merges value and risk, a necessary process for the program to work effectively.

Not to be excluded, other stakeholders such as insurance agents, communities, land surveyors, engineers, lenders, appraisers, and architects should raise their awareness of flood to better serve our client base. The flood program is not without its faults, but in my opinion, works very well with intention to address risk on money borrowed to allow an applicant to purchase real estate as a primary residence, or as an investment. With record high carbon dioxide levels, climate change, erosion, development, and sea level rise, flood will continue to impact our lives. We can slow the impact by attacking this immense risk with education.

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April changes

Remember: Many changes to the National Flood Insurance Program became effective as of April 1, 2015. Click the above photo to view FEMA's Fact Sheet.

Resources

FEMA Resiliency Meetings Scheduled

In coordination with the Maine Floodplain Management Program, FEMA has scheduled three "open house" meetings in Sagadahoc, Lincoln, and Waldo Counties, to assist property owners one-on-one with flood risk, mapping, and insurance issues. Please inform your neighbors and your clients!

Waldo County
Wed, April 29, 2015 2-4 and 6-8 pm
The Hutchinson Center, Belfast, ME

Lincoln County
Mon, May 11, 2015 2-4 and 6-8 pm
Waldoboro Town Office, Waldoboro, ME

Sagadahoc County
Tues, May 12, 2015 2-4 and 6-8 pm
Topsham Town Office, Topsham, ME

05 FARROC- National Flood Insurance Program

Ever wonder about the cost savings of elevating a building? The above photo demonstrates savings by comparing building elevation, cost of foundation construction, increased mortgage payment, annual flood insurance premiums, and months to recover the cost of the foundation. While the cost of the foundation in the highest elevated building exceeds the cost of the "on grade" foundation, the flood insurance premiums are substantially lower, there is tens of thousands of dollars in savings over the span of ten years, and the building is protected from predicted sea level rise. (Photo from DXA Studio's FARROC Competion entry, http://dxastudio.com/FARROC-Competition, 2014)

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Earth-butterflies

April 22nd is Earth Day!!

What are you doing to secure a sustainable future?
Check out Earth Day Network's "A Billion Acts of Green" to learn what people are doing all over the world to improve the quality of our planet and our lives.

Stephen-Hawking-intelligence-ability-to-change
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In the News

"New Flood Insurance Fees Take Affect Amid Broader Changes to Program"
A recent article in the Bangor Daily News highlights some of the changes that impact flood insurance rates, effective as of April 1, 2015, with some emphasis on secondary homes. We are pleased to see continued coverage on floodplain management topics in the local media, as residents are becoming more aware of the importance of understanding flood risk.
Dan Fishell, Bangor Daily News, April 3, 2015
Click here to read the article!

"Vacation Home Sales Exploded Last Year"
In keeping with the theme of secondary homes, this article states that, "vacation home purchases made up 21% of all home sales last year at an estimated 1.13 million, the highest level since 2003 and a 57% increase from 2013, according to a report from the National Association of Realtors." With beaches being the most most popular locations for vacation homes, we can not help but be concerned that property buyers may not be adequately informed about the flood insurance changes that are settling into place.
Kathryn Vasel, CNN Money, April1, 2015
Click here to read the article.

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miaa

Sponsored by the Maine Insurance Agents Association.

Learning Events

FOR INSURANCE AGENTS:

"Understanding Flood Zone Mapping and Risk"

Approved for 3 continuing education credits for insurance agents by the State of Maine Bureau of Insurance.

April 22, 2015, 9:00 - 12:00, MIAA Office - Hallowell, ME

Click here to register for this class on MIAA's website

BTB Home Page

Sponsored by Beyond the Boundary, the Educational Component of Nadeau Land Surveys

FOR REAL ESTATE LICENSEES:

"Land Surveying, Flood Zones, and Real Estate"
Approved by the Director of the Maine Real Estate Commission for 3 Contact Hours for real estate licensees.
Fee: $35
Supporting Sponsors:
Tony Cilea, VP of Mortgage Lending at Guaranteed Rate, Inc.
Red Door Title

Wednesday, May 6th, 2015, 9:00 AM - 12:15 PM - Wells National Estuarine Reserve, Wells, ME

CLICK HERE TO REGISTER FOR THIS COURSE

appraisal

Sponsored by the Maine Chapter of the Appraisal Institute.

FOR REAL ESTATE APPRAISERS:

"Understanding Flood Zone Mapping and Risk"

Approved for 2 Contact Hours for continuing education for appraisers.

Tuesday, May 19th, 2015, 3:00 - 5:15 PM - Augusta Country Club, Manchester Maine

Click here to register for this class on the Appraisal Institute's website.

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April Flood Funny

flood house
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