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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.

P1300584

Jim Nadeau, PLS, CFM, CFS, ANFI, Realtor

Message from Jim

So another month has gone by since the Homeowner Flood Insurance Affordability Act (HFIAA) has passed and many have exhaled acknowledging the need to worry less about flood risk and premiums for a few more years.

The National Association of Realtors has applauded the HFIAA as a responsible and balanced solution to the skyrocketing flood insurance premiums affecting residential and commercial properties that were unintentionally triggered by “Biggert-Waters” (NAR, 2014). In similar flavor, the Maine Association of Realtors shares an article by the Insurance Journal on their website stating the House and Senate have reached a bipartisan deal to delay changes that are raising premiums for many homeowners (MAR, 2013).

Good news, right? Well, not really! Contrary to various reports stating the new legislature, HFIAA is removing or stopping Biggert-Waters (BW12), this is not accurate. It is correct that portions have been repealed or modified, and additions have been made, but it is important for all to understand that the core of Biggert-Waters is still in place, and that HFIAA was not a wholesale repeal of BW12.

The good news pertains to the attention BW12 and HFIAA has generated in the real estate industry. Homeowners and consultants are thinking mitigation, future global concerns, and current and future impacts to real estate values. Concerns of flood insurance premiums are slowly flowing into real estate transactions. In motion are considerations such as explaining flood insurance in Residential Property Transaction Booklets, termination clauses relative to flood, and the mention of flood in the Seller’s Property Disclosure. This level of flood acknowledgement in every real estate transaction nationally will aid the program well.

Remember, a mortgage note in its simplest context is an investment by an individual or entity providing financial backing for a transaction. The interest rate charged creates the investor’s return on investment. In similar angle of a house inspection, mortgage loan inspection, or an appraisal; each provide an evaluation of investment risk since the improvements being purchased are often used as the collateral of the loan if default occurs. Emphasis on well and septic status, age of roof singles, age of furnace, etc. are all important components in evaluating or creating value, but disclosure of flood history should also be evaluated in this process. None of the above noted improvements will impact value of a home more than a flood event. To even have a single statement or question on disclosure is a wonderful start since the word “Flood” becomes mentioned in every real estate transaction.

Personally, I believe that every real estate professional providing service or product to the public must gain a higher level of flood knowledge. Last month, I fielded questions or concerns from seven different professions pertaining to risk, mitigation, and insurance. Reality is setting in that flood risk and insurance are not just flowing through our lives, but are here to stay! Homeowners who address it properly will protect their asset(s), minimize damage, minimize or eliminate insurance premium, and possibly save a life. Opportunities are waiting for the professional consultant desiring to provide superior flood guidance to the public. I have been very fortunate to meet many flood professionals at the state, regional, and national level, and am simply humbled by their passion, diversity, and knowledge, but the program needs more foot soldiers (i.e. professional consultants) rendering product and education to each local community.

National Association of Realtors, (2014). Realtors applaud speedy senate action on bipartisan flood insurance affordability bill. Retrieved from http://www.realtor.org/news-releases/2014/03/realtors-applaud-speedy-senate-action-on-bipartisan-flood-insurance-affordability-bill

Maine Association of Realtors, (2014). Bipartisan deal reached to delay flood insurance premium hikes: Waters. Retrieved from http://www.mainerealtors.com/articles/83-221/bipartisan-deal-reached-to-delay-flood

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NFIP Pie Chart

We recently recreated this pie chart that reflects data gathered from FEMA and the U.S. Census Bureau, comparing the percentage of housing units in the U.S. that receive subsidized flood insurance rates (about 1% as of 2012). Looking at these statistics really broadened our perception of the current controversy over the nationwide impact of phasing out subsidized rates. What do you think?

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Money-Map

"In the past, and in the absence of clear Congressional direction, the mapping program was almost solely focused on supporting flood insurance rating as well as serving as a tool for the adoption and enforcement of local floodplain management regulations. However, the purpose of the National Flood Mapping Program is clearly meant to fulfill a broader mandate -- to create the nation's flood risk data set so communities, states, and individuals can take action to reduce losses." - ASFPM 2013

Resources

The Cost of Updating Flood Maps

Last year, the Association of State Floodplain Managers (ASFPM) released a report called "Flood Mapping for the Nation: A Cost Analysis for the Nation's Flood Map Inventory". Click the link to learn more about how flood hazard mapping and the National Flood Insurance Program has evolved, how taxpayers are paying larger shares of disaster costs, how investing in flood maps to guide development saves over a $1 billion/year in loss, and what it is going to cost to update and implement more accurate maps for the future.

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flood manual

Insurance Corner

Updated Flood Insurance Manual Reissued, Effective June 1, 2014

The NFIP Flood Insurance Manual, used primarily by insurers and agents selling and servicing federal flood insurance, was all set to release an updated version that reflects the changes required for implementation of the Biggert-Waters Reform Act of 2012. Then, as you know, the 2014 Homeowner Flood Insurance Affordability Act repealed and modified certain provisions and made additional program changes. Since the Manual was almost complete at the time, the NFIP will be issuing adjustments to the edition at a later date to address the changes by the new Act. The most recent version of the Manual, including an outline of the significant revisions, can be found in FEMA's Resource & Document Library.

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geo bee

Vincent Falrdeau at Saco Middle School

Current Events

The nephew of our very own Tom Blake, thirteen year old Vincent Falardeau of Saco, just recently won the state's Geographic Bee on April 4th and is soon headed off to D.C. to compete on the national level! Vincent will be representing Maine on May 19-21 at the National Geographic Society headquarters. Good luck, Vincent!

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May Flood Funny

insurance cartoon
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