NAR Responds to FEMA’s Flood Insurance Request

WASHINGTON – Leslie Rouda Smith, president of the National Association of Realtors® (NAR), issued a public comment on the Federal Emergency Management Agency’s (FEMA) request-for-information notice entitled “Request for Information on the National Flood Insurance Program’s Floodplain Management Standards for Land Management and Use, and an Assessment of the Program’s Impact on Threatened and Endangered Species and Their Habitats.”

Smith thanked FEMA, and said that Realtors® support encouraging communities to adopt higher building standards to avoid future flood damage and costly retrofits. She says the current 100-year flood height standard doesn’t vary between coastal and non-coastal areas, saying “FEMA has demonstrated that these standards do not provide the same level of protection they did 50 years ago, and that the benefits of setting higher standards (e.g., one foot above the 100-year flood height) would exceed the additional cost of construction especially in coastal areas.”

Flood insurance programs NAR agrees with in the letter

1. Continuing to implement Risk Rating 2.0: Equity in Action to provide up-front the full cost of insuring each property.
2. Flood mapping by property rather than flood zone. The Technical Mapping Advisory Council has recommended property-specific mapping which has been successfully implemented by the state of North Carolina.
3. Expanding mapping to all of the U.S. and including areas at high risk due to urban, repeated and future flooding.

However, Realtors “would not support excluding states from the NFIP for not adopting or enforcing a real estate disclosure requirement,” adds Smith. “All 50 states already require the disclosure of known material adverse facts or conditions, including past flood damage, and many states have additional requirements related to flooding.” While the requirements vary by state, they’re “often established by a state agency, not the Legislature, or found in common law as interpreted by the courts.”

Smith says it’s unclear how a disclosure would work, asking how local governments would administer NFIP’s floodplain management regulations. Who would legally enforce standards governed by a separate state agency or court?

“Congress would also have to significantly expand FEMA’s resources, expertise, authority and personnel to oversee such requirements,” Smith says.

“NAR is not aware of any studies by FEMA or other entities showing that a NFIP disclosure requirement would enable communities to constrict or avoid the development of special flood hazard areas, assist in reducing flood damage, or otherwise improve land use and management pursuant to 42 USC Sec.4102,” says Smith. “Meanwhile, excluding states including Florida, New Jersey and South Carolina, which collectively represent more than 40% of NFIP’s policyholders, would be costly to both property owners and taxpayers.”

Smith recommended that FEMA itself disclose the full NFIP claims history of each property to buyers and renters, as well as owners, before real estate transactions are completed.

“This is critical additional information for consumers, and it could be achieved by issuing a routine use exception to the Federal Privacy Act,” Smith says.

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