AG Coakley Urges Federal Leaders to Delay Implementation of New Flood Insurance Changes
Asserts That FEMA Has Not Complied With Requirements To Conduct Affordability And Peer Reviews Before Implementing This Law
BOSTON – Asserting that FEMA has not complied with its mandates to conduct affordability and peer reviews, Attorney General Martha Coakley today urged Congress to delay implementation of a new bill that would dramatically increase flood insurance rates for many families and businesses.
In a letter file size 1MB sent today to House Speaker John Boehner (R-Ohio) and Senate Majority Leader Harry Reid (D-Nevada), AG Coakley asks that the Biggert-Waters Flood Insurance Reform Act be delayed until the Federal Emergency Management Agency (FEMA) complies with Congress’ mandate to undertake an affordability review and a peer review of the new flood zone maps. By eliminating various federal subsidies in the National Flood Insurance Program (NFIP) and expanding flood zone maps, Biggert Waters will pose harsh economic consequences for many homeowners and small businesses in Massachusetts and across the country.
“Premature implementation of the Act threatens the housing recovery that Massachusetts and the nation are just starting to experience,” AG Coakley states in the letter. “We believe that dramatically increased flood insurance rates will tip the balance for many homeowners who weathered the economic downturn, but are still feeling the residual effects of the housing crisis.”
In the letter, also addressed to House Minority Leader Nancy Pelosi (D-California) and Senate Minority Leader Mitch McConnell (R-Kentucky), AG Coakley asserts that because of the redrawn maps, insurance rates will not only increase for those already in the flood plain but for many homeowners and small businesses that for the first time will be required to buy flood insurance.
The Attorney General’s Office has heard from several homeowners who purchased their homes in the last year - as the housing market was turning around - have been informed that the flood maps have been redrawn so that they are now required to purchase flood insurance at costs of $10,000 and up. For many, this additional cost is not feasible. Their only option is trying to sell the property at a reduced price that accounts for the added cost of this unanticipated insurance.
Flood insurance is compulsory for property owners with mortgages located in certain zones on Flood Insurance Rate Maps. These homeowners and businesses have no choice, nor do the banks that service their mortgages, but to have flood insurance. Even properties in the new flood zones that do not have mortgages may still be affected, due to heightened building requirements or lower market demand for those properties.
“We have already heard from many small businesses and homeowners about the devastating impact of this new policy,” AG Coakley said. “Several homeowners that purchased their homes in the last year—as the housing market was turning around—have been informed that the flood maps have been redrawn so that they are now required to purchase flood insurance at costs of $10,000 and up. For many, this additional cost is not feasible.”