In 2012, what was known as the Biggert-Waters Act became law and was considered a victory in that it would continue a much needed insurance program and in addition, shore up the debt that was mounting in the program.
All good right?
Not quite. Some of the consequences of this legislation were the extreme increase in rates in certain areas and the reclassification of at-risk properties which put them in a higher risk category and a higher cost situation.
Certain grandfathering of rate subsidies in the program will also phase out, and rate hikes by either a sale of the property or if there is a lapse in coverage also apply.
The unintended effects that include diminished sales and home prices, plus unaffordable insurance are all things hoped to be addressed by a new proposal.
The other requirement that has gotten NAR’s attention is the fact that these higher cost consequences should have been evaluated through an affordability study that was to be conducted by FEMA.
This analysis was never performed and NAR, along with IAR, believe that any rate changes should be put on hold until the affordability analysis is conducted and the results evaluated.
One of the original laws chief sponsors agreed. Maxine Waters (D-CA) along with Michael Grimm (R-NY) introduced HR3370 known as the Homeowner Affordable Flood Insurance Act.
According to NAR “This bipartisan measure essentially calls for a four-year “time out” on further implementation of the rate structure until FEMA completes the affordability study required by Biggert-Waters and also proposes a regulatory solution to issues found in the study.”
This house measure has a Senate companion championed by Senator Menendez (D-NJ)and, Sen. Johnny Isakson (R-GA), who is also a REALTOR.
Through IAR’s engagement on this issue including, letter writing, discussions with members of Congress and their legislative staffs, and through member involvement with IAR’s recent Let’s Talk Real Estate programs, several Illinois Congressmen have taken a lead in helping launch this legislation.
This bipartisan effort is recognized and we would like to thank Congresswoman Jan Schakowsky (D-Evanston) and Congressmen Danny Davis (D-Chicago) , Rodney Davis (R-Taylorville), Bill Enyart (D-Collinsville), Luis Gutierrez (D-Chicago) and House Financial Services Committee member Bill Foster (D-Naperville) for being original co sponsors of the legislation.
It is our hope that given the bipartisan effort and a duplicate bill has been introduced in the Senate that this policy will move through Congress and will get signed by the president soon.
The Let’s Talk Real Estate series has been a great component in advocacy on this and several other issues like mortgage and tax policy. This series will continue in 2014, so if your member of Congress has not been part of the series yet, stay tuned for dates and times at www.illinoisrealtor/letstalkre.com.