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The Official Website of the Attorney General of Massachusetts
For Immediate Release - February 27, 2014

AG Coakley Testifies in Support of Flood Insurance Legislation

Proposed Bill Would Cap Flood Insurance Rates Resulting from New FEMA Flood Zone Maps

BOSTON – Concerned that increased insurance rates caused by new flood zone maps will “tip the balance” for homeowners who weathered the economic downturn but are still feeling its effects, Attorney General Martha Coakley testified today in support of proposed legislation that would reduce those costs by tying the amount of insurance to mortgage balances.

“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,” AG Coakley said before the Joint Committee on Financial Services about the new flood zone maps introduced by the Federal Emergency Management Agency (FEMA). “Without this help, we are gravely concerned that many additional homeowners will face foreclosure.”

The legislation, titled An Act Relative to Flood Insurance was filed by AG Coakley and Speaker Robert DeLeo, and co-sponsored by Rep. James Cantwell, Rep. Garrett Bradley, Rep. Josh Cutler, Rep. Bruce Ayers, Rep. David Vieira, Rep. Vinny deMacedo and Senator Robert Hedlund.

The bill would prohibit creditors from requiring homeowners to purchase flood insurance in an amount that exceeds the outstanding balance of their mortgage, requires coverage for contents, or includes a deductible of less than $5,000. Tying the amount of coverage to the outstanding mortgage balance, instead of a higher amount, would lower premiums for the homeowners impacted by the new change. Homeowners would still have the option of purchasing a greater amount of insurance.

The legislation requires banks, in each instance flood insurance is required, to provide a notice to homeowners explaining that insurance coverage tied to the outstanding mortgage amount will only protect the current mortgage interest, and may not be sufficient to pay for repairs or property loss after a flood.

In September, AG Coakley spoke at the “Make Waves” rally in Scituate alongside State Representative Jim Cantwell; State Representative Garrett Bradley; State Senator Robert Hedlund; Congressman Stephen Lynch and local elected officials, calling on Congress and FEMA to reform new flood insurance laws.

In October, AG Coakley sent a letter to House Speaker John Boehner (R-Ohio) and Senate Majority Leader Harry Reid (D-Nevada) urging the delay of the Biggert-Waters Flood Insurance Reform Act until FEMA complies with Congress’ mandate to undertake an affordability review and a peer review of the new flood zone maps defined in the bill.

AG Coakley filed an amicus brief in November supporting a Mississippi lawsuit alleging the new flood rates are arbitrary and unlawful. The brief argues that FEMA failed to collect accurate data before implementing the new rates.

In January, the U.S. Senate approved bi-partisan legislation that postpones rate increases until FEMA assessed the impact of an overhaul to the flood insurance program. Earlier this week, Republicans in the U.S. House presented their own version of a flood insurance overhaul.

On February 5, FEMA announced that it would not be implementing higher flood insurance premiums until at least October 2015. FEMA has also announced that it will postpone implementation of new flood maps in Plymouth County until at least 2015, to give the agency more time to address the appeals from affected communities.


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