The National Association of Home Builders (NAHB) called on Congress recently to take steps to resolve unintended consequences of the Biggert-Waters Flood Insurance Act that are resulting in huge premium spikes for many home owners and impacting the sale, construction and remodeling of homes across the nation.
Testifying before the House Financial Services Subcommittee on Insurance and Housing, Barry Rutenberg, immediate past chairman of NAHB and a home builder from Gainesville, Fla., said a key concern of the law is that it requires properties that had subsidized rates under the National Flood Insurance Program (NFIP) to immediately move to the full actuarial risk rate when they are sold or transferred.
“Prospective home buyers fear the higher rates will make their mortgages unaffordable, especially in today’s already tight credit conditions,” said Rutenberg. “We have heard of cases throughout the country where pending sales were canceled at the last minute because of this sharp rate increase.”
Rutenberg added that this not only harms home sales, but also impedes the move-up buyer, who will not be able to sell their current home and move into a newly constructed one. “Requiring full-risk rates to be paid upon sale or transfer for historically subsidized and previously grandfathered properties will lead to lower property values and hurt many local housing markets at a time when the U.S. housing recovery remains fragile and uneven,” he said.
To resolve some of the costly problems and unanticipated issues resulting from the implementation of the Biggert-Waters Flood Insurance Act, NAHB recommends that Congress take the following steps: