Your SlideShare is downloading. ×
0
Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
NATIONAL ...
Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
What’s ha...
Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
This is N...
Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
Buying a ...
Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
Annual Pr...
Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
Grandfath...
Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
1% of Pro...
Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
Policy As...
Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
Refunds
M...
Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
Installme...
Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
Home Impr...
Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
TAKEAWAYS...
Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
More Info...
Upcoming SlideShare
Loading in...5
×

Flood Insurance Reform is Law, Now What?

4,220

Published on

Now that flood insurance reform has been signed into law, you need to understand what’s changed, what the new regulations are and how it will affect your business.

CTAR’s Government Affairs Director, Ryan Castle, walks you through the changes this law creates, how your pending closings will be affected and when we can expect to see the full implementation of this law.

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
4,220
On Slideshare
0
From Embeds
0
Number of Embeds
8
Actions
Shares
0
Downloads
15
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Transcript of "Flood Insurance Reform is Law, Now What?"

  1. 1. Charleston Trident Association of REALTORS® Facebook.com/CharlestonRealtors @ChasRealtors CharlestonRealtors.com NATIONAL FLOOD INSURANCE PROGRAM Legislative Update April 2014 Ryan Castle Government Affairs Director Charleston Trident Association of REALTORS®
  2. 2. Charleston Trident Association of REALTORS® Facebook.com/CharlestonRealtors @ChasRealtors CharlestonRealtors.com What’s happened? July 2012 – Biggert Waters (BW) passes May 2013 – FEMA announces BW will be retroactive June 2013 – NAR starts working on fix to flood insurance bill; Greenville, SC REALTOR® Donna Smith heads up NAR PAG on flood insurance October 2013 – Rate increases start taking effect for Pre-FIRM properties January 2014 – Senate passes a 4 year delay February 2014 – House passes BW overhaul bill; Senate follows suit March 2014 – President signs BW overhaul bill
  3. 3. Charleston Trident Association of REALTORS® Facebook.com/CharlestonRealtors @ChasRealtors CharlestonRealtors.com This is NOT a DELAY! This is a REFORM of Biggert- Waters Subject to laws Congress passes as the same with all tax rates and other federal laws affecting real estate (Capital Gains example) Still use SCR’s Flood Insurance Property Disclosure Form
  4. 4. Charleston Trident Association of REALTORS® Facebook.com/CharlestonRealtors @ChasRealtors CharlestonRealtors.com Buying a Pre-FIRM home/property Sec. 205-Sale/New Policy Trigger Below full risk rate Original BW Property moved to full risk rate when triggered by a property/new policy purchase – meaning at point of sale full risk rate was price New law Repeals Sec. 205-Sale/New Policy Trigger (including the sale of second home or business) Returns to allowing the new owner to assume the old policy at the current rate (i.e. policy stays with property, not owner) Pre-FIRM properties start assuming rates on MAY 1st .
  5. 5. Charleston Trident Association of REALTORS® Facebook.com/CharlestonRealtors @ChasRealtors CharlestonRealtors.com Annual Premium Increases for owner-occupied Pre-FIRM properties FEMA will calculate Subsidized Rate the way they always have calculated it yearly. Subsidized rate = (Annual NFIP Expenses – Revenue from actuarial policyholders)/#Subsidized Policies From that determination, Subsidized Rates will have a minimum increase and a maximum increase. Second Home/Business: 25% increases until reach full risk (same as current law) Prior to Biggert Waters Capped Subsidized Rate premium increases at 10% per rate class no cap per property No Minimum Increase Biggert Waters Capped Subsidized Rate premium increase at 20% per rate class No cap per individual property No minimum increase Post Biggert Waters Caps Subsidized Rate premium increase at 15% per rate class 18% cap per individual property 5% minimum increase
  6. 6. Charleston Trident Association of REALTORS® Facebook.com/CharlestonRealtors @ChasRealtors CharlestonRealtors.com Grandfathered Properties Sec. 207-Remapping Trigger Grandfathered: Post-firm homes that were built to compliance at the time it was built but laws have changed since. Original BW 5 year phase out of grandfathered rates triggered by when new flood maps are adopted locally Expected in coastal SC late 2014 to early 2015 New law Repeals remapping and phase out trigger AND Restores Grandfathered properties to how they were treated prior to BW Stays in flood zone it was built in As flood zone rates increase rate will increase as always has happened
  7. 7. Charleston Trident Association of REALTORS® Facebook.com/CharlestonRealtors @ChasRealtors CharlestonRealtors.com 1% of Property’s Value “…strive to minimize the number of policies with annual premiums that exceed one percent of the total coverage provided by the policy.” For example, a house at $200,000 should not have a premium over $2,000. However, this language is NOT a requirement; FEMA must only “strive” to do this. Details will be in FEMA’s guidance on this issue
  8. 8. Charleston Trident Association of REALTORS® Facebook.com/CharlestonRealtors @ChasRealtors CharlestonRealtors.com Policy Assessment for all properties that are not paying full risk rate $25 assessment on all NFIP primary homes; $250 on the businesses and second homes in the NFIP The funds will be deposited in the NFIP reserve account created by Biggert-Waters to build a cushion for future catastrophic losses.
  9. 9. Charleston Trident Association of REALTORS® Facebook.com/CharlestonRealtors @ChasRealtors CharlestonRealtors.com Refunds Must occur within 16 months REFUNDS APPLY TO: o Policyholders in high-risk areas who were required to pay their full-risk rate after purchasing a new flood insurance policy on or after July 6, 2012. REFUNDS DO NOT APPLY TO: o Policyholders paying the 25 percent annual rate increases, as required by Congress in BW- 12, for a Pre-FIRM subsidized non-primary residence, business, Severe Repetitive Loss property, or building that was substantially damaged or improved. o Policyholders whose full-risk premium is less than the Pre-FIRM subsidized premium, or who were not overcharged according to any retroactive revisions to the Pre-FIRM subsidized rates required by the new law.
  10. 10. Charleston Trident Association of REALTORS® Facebook.com/CharlestonRealtors @ChasRealtors CharlestonRealtors.com Installment Payments for Premiums The new law will allow monthly installment payments for premiums at the option of the consumer. Deductibles Under BW, pre-FIRM deductibles for risks with building coverage of more than $100,000 were to increase from $1,500 to $2,000. For similar post-FIRM risks, the deductibles were to increase from $1,000 to $1,250. These changes remain, but the new law also creates an optional deductible of $10,000 for residential properties; previously there was a $5,000 deductible cap. If chosen, a disclosure indicating that the policyholder is responsible for the out-of- pocket losses must be included with the policy. Deductibles, as always, though is more of a lender decision as to what they’ll allow the borrower to have as a deductible.
  11. 11. Charleston Trident Association of REALTORS® Facebook.com/CharlestonRealtors @ChasRealtors CharlestonRealtors.com Home Improvement Fairness Biggert-Waters phased-out subsidies for pre-FIRM properties that were “substantially improved”. While historically the threshold to cross “substantially improved” was 50 percent of Fair Market Value (FMV), Biggert-Waters changed this to 30 percent FMV. The new law changes the threshold back to 50 percent FMV. Reimbursement for Map Appeals The new law allows FEMA to utilize the National Flood Insurance Fund to reimburse policyholders who successfully appeal a map determination. Biggert-Waters provided FEMA the authority to reimburse homeowners for successful appeals of map findings, but Congress has never appropriated funding for this purpose. Flood Insurance Advocate The law establishes a Flood Insurance Advocate within FEMA to answer current and prospective policyholder questions about the flood mapping process and flood insurance rates. The Flood Insurance Advocate will be responsible for assisting property owners through the map appeals process, and improve outreach and coordination with local officials, community leaders, and Congress.
  12. 12. Charleston Trident Association of REALTORS® Facebook.com/CharlestonRealtors @ChasRealtors CharlestonRealtors.com TAKEAWAYS Reform, not a delay – fix to problem No more Point of Sale flood insurance premium hikes Pre-FIRM (subsidized) policies assumable on May 1st Grandfathered rates will stay and not be phased out with new maps Still use SCR’s Flood Insurance Disclosure Form
  13. 13. Charleston Trident Association of REALTORS® Facebook.com/CharlestonRealtors @ChasRealtors CharlestonRealtors.com More Information www.CharlestonRealtors.com/FloodInsurance Ryan Castle Government Affairs Director Charleston Trident Association of REALTORS Ryan@CharlestonRealtors.com 843.793.5212 @ryanfcastle www.ryanfcastle.com
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×