Flood Insurance

Attached article provided by Mn Association of Realtors

Washington Report
Flood Insurance Update: January 17, 2014 - On Jan. 16, 2014, Congress passed the Omnibus Appropriations Bill (H.R. 3547) to fund the federal government through Sept. 30, 2014. The bill prohibits FEMA from implementing future premium increases on “grandfathered properties” for nine months. It does not limit premium increases triggered by the sale of a property, which FEMA implemented Oct. 1, 2013. (“Grandfathered” property owners are allowed to keep the lower rate from older maps when new maps are issued.)

On Jan. 27, 2014, the Senate is scheduled to vote on the Homeowner Flood Insurance Affordability Act (S. 1926) sponsored by Senators Menendez (D-NJ) and Isakson (R-GA). The bill calls a 4-year timeout on increases both for the property buyers (including buyers of a second home or business) and the owners of grandfathered properties. The bill also establishes a flood insurance advocate within FEMA to investigate rate increases and assist property owners with multiple or miscalculated rate quotes.

This is a make-or-break moment for the bill in its current form. It will take 60 votes to move forward. Please contact both your Senators TODAY and urge them to support the bill and oppose any poison pill amendments.

ISSUE BACKGROUND:

• On Oct. 1, 2013, FEMA imposed full-risk rates on properties sold after July 2012.
• Because FEMA retroactively applied the increase, many buyers between July 2012 and Oct. 2013 were not told of the increase before purchasing the property.
• Experts have found numerous rate quote miscalculations and discrepancies calling into question the accuracy of many rate increases around the country.
• In recent Congressional testimony, NAR provided several examples where the quoted rates exceeded the true risk rate by $10,000-$30,000 per year.
• Only FEMA has access to the insurance data but missed the congressional deadline to submit an affordability report that could show whether the rate quote miscalculations are isolated incidences or part of a national pattern.
• Until FEMA investigates and finally complies with the statutory requirement to report to Congress, NAR is calling for the 4 year time out. There are too many inaccurate rate quotes to ignore.
• NAR is not objecting to full risk rates or a longer term phase in, but home buyers need a pause now while Congress works out the details and reviews FEMA’s report.
• The bill will not benefit only million dollar beach houses whose values far exceed the $250,000 coverage limit; middle class families whose homes values fall below this limit need a way to insure their property against flooding.
• 5.6 million rely on NFIP in 20,000 communities where flood insurance is required for a mortgage
• A delay does not increase overall NFIP borrowing; it does put the brakes on falling home values due to skyrocketing and potentially inaccurate flood insurance rates.

NAR Comments on QM Rule - On Jan. 14, 2014, NAR submitted a statement for the record to the U.S. House Financial Services Subcommittee on Financial Institutions and Consumer Credit hearing on "How Prospective and Current Homeowners will be Harmed by the CFPB's Qualified Mortgage Rule." The Dodd-Frank Wall Street Reform Act established the Qualified Mortgage (QM) as the primary means for mortgage lenders to satisfy its “ability to repay” requirements.

In the statement, NAR pointed out that it has been generally supportive of the Consumer Financial Protection Bureau’s (CFPB) efforts to craft a QM rule that is not unduly restrictive and provides a safe harbor for lenders making QM loans. NAR has had policy supporting the idea that lenders measure a consumer’s ability to repay a loan. For this reason NAR strongly supports the Ability to Repay (ATR) rule in general but has significant concerns with some elements of the QM portion of the rule, which include the 3 percent cap on points and fees as well as the 43 percent Debt-to-Income (DTI) limit. NAR also believes it is critical for policymakers to construct a QRM rule that mirrors the newly implemented QM rule.

NAR Statement

NAR Seeking Members Contact by Patent Trolls - Have you received a demand letter from a “patent troll”? We want to hear from you.

Companies, often referred to as patent trolls, are buying up broad patents and using them to threaten small businesses and individuals, including REALTORS®. Some of the recent examples of patent troll demands that our members have received involved a patent related to websites that allow users to locate, search for, and transmit property information to others and a patent related to use of scanner copier machines.

NAR is working on several fronts to fix loopholes in the patent litigation system that allow patent trolls to continue to threaten unsuspecting businesses and end users in this way. BUT WE NEED YOUR HELP. If you have received a demand letter seeking a licensing fee for a technology or process used in your business please contact us. We would like to learn from you how widespread this issue is for the real estate industry in order to most effectively assist in finding a solution. Even if you received a letter and paid a licensing fee, we’d like to hear from you.

Please send me an email: mwyne@realtors.org or Kjohnson@realtors.organd we'll get in touch with you.

For more information on the importance of patent litigation reform to the real estate industry and NAR’s position, visit :http://www.realtor.org/topics/patent-litigation-reform

Visit NAR's Patent Litigation Reform page

FHA Condo Insurance Requirement Waiver - The Federal Housing Administration (FHA) has temporarily waived the blanket hazard, flood, liability and other insurance requirements in Mortgagee Letter 2011-22 for Manufactured Housing, Detached and Common Interest Housing Projects. The waiver notice, which is posted onFHA’s Condominium Mortgage insurance page, details the projects eligible for the waiver and FHA’s findings and determinations. The waiver is being granted to allow owners in these projects to obtain individual insurance policies for their units as required by state or local condominium laws and FHA requirements.  FHA recognizes that requiring a blanket insurance policy for these projects can be impractical and cost prohibitive. NAR continues to work with FHA on condo policies to ease restrictions on condo sales and purchases.

Mortgagee Letter 2011-22

FHA’s Condominium Mortgage insurance page

OMB Questions EPA Water Rule - The White House Office of Management and Budget (OMB) has reportedly requested that EPA clarify whether the "significance" of a connection between smaller waterbodies and larger downstream waters marks a technical or policy issue -- echoing questions raised by a coalition of regulated stakeholders, including NAR, who are concerned that the agency may not be adequately weighing the issue as it works to clarify jurisdiction of the  Clean Water Act (CWA).

The issue is critical because how the term is defined could determine when or whether the smaller waters are subject to regulation under the water law. The issue is not whether these waters are connected, but does the strength and level of the connection warrant the expensive permitting and regulation that would be required.

NAR believes that the EPA does not have statutory authority to regulate all waters and believes that is a question only Congress can resolve.

Elements of Net Neutrality Order Overturned - The U.S. Court of Appeals for the District of Columbia ruled January 14 that key elements of the Federal Communications Commission’s (FCC’s) 2010 Open Internet Order are invalid. The Order, otherwise known as Network Neutrality rules, prohibited Internet Service Providers (ISPs) like Verizon, Comcast and AT&T from discriminating in network service delivered to content providers.

By tossing out the rules, ISPs are now free to charge content companies higher fees to deliver Internet traffic faster or otherwise more efficiently.

It remains to be seen what the response to this decision will be. The FCC may appeal the decision to the Supreme Court meaning that further litigation will delay the effects of the ruling. It is also possible that the FCC could reclassify broadband service as a common carrier thereby bringing ISPs within their regulatory authority.

Net Neutrality is the concept that everyone should have equal access to the web. For example large web publishers like eBay or Amazon should not have the ability to pay their Internet Service Provider (ISP) so that their sites load faster than a smaller retailer with fewer financial resources. These rules give the FCC the authority to step in and mediate disputes about how ISPs are managing their networks.