Homeowners Forced To Buy Flood Insurance After FEMA Redraws Maps

[Purveyor]

Tens of thousands of homeowners in Southern California are being forced to buy costly flood insurance because new maps issued by a federal agency say they live in a high-risk flood area.

The federal government has informed property owners in more than 150 cities and unincorporated areas in Los Angeles, Orange, Ventura, Riverside and San Bernardino counties about the new requirement. Most live near rivers and creeks, below dams or in low- lying areas that are at greater risk of flooding than previously believed, according to maps developed by the Federal Emergency Management Agency.

Premiums range from $500 to more than $1,700 a year. Insurance is mandatory for anyone with a federally backed mortgage, and lenders will typically buy policies, sometimes at a higher cost, for property owners who fail to do so on their own. Fannie Mae and Freddie Mac own or guarantee more than half of all U.S. mortgages.

Angry homeowners in several parts of Southern California dispute the new maps and have formed groups to challenge them.

In some cases, local governments are paying for studies to challenge FEMA's maps, and in a few cases, the agency has backed down.

The new maps are part of a nationwide effort that FEMA began in 2003 to better identify properties that could flood in a so-called 100-year storm -- the type of deluge that FEMA calculates has a 1% likelihood of occurring in any given year. In much of the country, the redrawn maps greatly increase the number of homes included in flood zones.

MORE...

http://www.latimes.com/news/local/la-me-flood-maps4-2010jan04,0,6016681.story

[yodoobo]

1. Didn't realize that requirement could be imposed AFTER closing

That amount is more than enough to force many into foreclosure.

[GoCubsGo]

6. The requirements are only for those with federally-funded mortgages

I strongly suspect that they will work something out with those who might be at risk of foreclosure, as I don't think the government wants to be stuck with the homes or the messes caused by their foreclosure.

[Hassin Bin Sober]

10. It will affect everyone with a mortgage loan on their home.

I'm not aware of ANY lender that doesn't require flood insurance. Pretty much everyone mimics Fannie/Freddie in that respect. Meaning Jumbo loans, portfolio loans etc.

[GoCubsGo]

11. As I understand it...

...that only holds true for NEW mortgages, not existing ones.

[Hassin Bin Sober]

14. Any closing package I have ever seen contains an agreement to ...

.. purchase Flood insurance if you are later deemed to be in a flood zone.

[Hassin Bin Sober]

2. This is nothing new.

When you take out a mortgage loan you are required to sign a document wherein you agree to buy flood insurance if you are deemed to be in a flood zone at a later date. As with home-owner's insurance, the lender reserves the right to "force-place" the insurance if you fail to purchase coverage.

Disputing Fema maps does often work - but it costs money. I had some friends just go through the process - their home was high up on a bank near a river but it still fell in the new map area. They had to hire a surveyor/engineer.

[Craftsman]

3. If you live near water you need flood insurance

[atreides1]

5. Define "near"

[GoCubsGo]

7. I don't know about "near", but...

Anyone who lives in a low-lying area should have it, whether or not there is water around. A place can be high and dry for decades, but all it takes is one monsoon or tropical storm...

[Craftsman]

18. I you are in a flood plain you need it

I live on the Gulf coast and will always have flood insurance.

[LiberalFighter]

4. Could they redraw the map for Crawford and Bush's new home?

So it would be in the flood plain.

[haele]

8. Considering what happened last year in Atlanta, they really do need to take a hard look at flooding

What might not have flooded even in a "100 year deluge" ten years ago may have so much concrete and asphalt around that the water has no where to go but "up" - directed into city and suburban streets by curbs, walls, and housing, where before, it would just run off into the natural channels and dissipate into the ground.
I know it's expensive - the area where the house I used to own got re-degnated as a flood zone because of all the development. Even large backyard lots (which used to be common in that area) used to keep flooding down, but with houses doubling and tripling up on what used to be single lots pretty much everywhere, there's just no soak area anymore; it just goes out into the street and turns into swimming pools.

Haele

[kirby]

9. Isnt this an Insurance Mandate

that uses private sector companies to run the program (with govt subsidies)?

[GoCubsGo]

12. Nope.

Flood insurance is issued by the federal government, not private agencies.

[DURHAM D]

16. Actually the policies are issued by private insurance companies.

But because they work with FEMA it is at reduced rates. (Sound like a good model for other kinds of insurance?)

If you are in the flood zone you can buy fairly inexpensive flood insurance from one of those private insurance companies backed by FEMA. If you are not in a flood zone but still want flood insurance it costs a whole lot more.

[TwilightGardener]

13. I used to have to pay for FEMA flood insurance--

and I lived out on the high plains, a mile away from a fairly small creek! Ridiculous.

[tularetom]

15. My kid bought his home in 2004

He tried to refinance last summer to take advantage of the drop in interest rates and was informed that unbeknownst to him, his home had somehow moved into a flood zone and he was required to obtain flood insurance in order to get the new loan. He called his insurance company and they asked a few questions and quoted him a premium of $300 per year for the insurance. He did the math and it still seemed like a pretty good deal. So he said OK. Then the insurance company made a site visit . Just a formality they said. When they visited the site they discovered that his house had a basement. Which they had never bothered to ask before. A couple days later he gets a phone call from them telling him his premiums had been recalculated and would in fact now be $2,100 per year. Needless to say the refinance went down the crapper.

And this is in an area where there has been no flood within the memory of anyone currently alive.

It's probably just another insurance scam.

[mn9driver]

17. If this affects you, get a Letter of Map Amendment from FEMA.

I paid for mandatory flood insurance for several years before I figured this out. If your property is really not at risk to flood, any surveyor can plot it and send the data to FEMA using the procedure at this link:
http://www.fema.gov/plan/prevent/fhm/fmc_loma.shtm

They will send you a LOMA which you then send to your mortgage lender. Your lender has no choice but to drop the flood insurance requirement after they recieve the letter. This cost me about $400 for the surveyor and paperwork about 7 years ago.