Good morning Governor Scott, General Bondi, Chief Atwater and Commissioner Putnam. It is great to be here representing Florida’s 118,000 Realtors. Governor, all of your positive releases about Florida’s recovery makes me very proud that our real estate market is contributing so much to that rebound. We released our existing home sales statistics last Thursday and it is exciting that we are in the 20th month in a row of increased home prices. Increases in home prices and home sales are certainly something I hope to be able to talk about for many months to come.
What I am here to discuss with you is so important, I want to carefully read my remarks. Unfortunately, the federal Biggert-Waters Flood Reform Act passed by Congress and which was just outlined for you could bring that positive momentum to a screeching halt. I want to be sure that the general public knows that Realtors understand the need for solvency in the federal flood program. However, the Biggert-Waters Act contains severe unintended consequences that are harmful to all Floridians as well as states beyond our borders. We believe the reforms will have a detrimental impact on the entire economy of Florida, including existing homeowners and those who want to buy Florida’s properties.
Most sections of the bill relating to rate changes have what you and I would call a “glidepath” or “phase in” to actuarial soundness – similar to what we have done successfully here in Florida with Citizens Property Insurance Corporation. Where there is not a glidepath specified in the flood reform act is for the new homebuyer. This reform measure will, in effect, lock current homeowners into their property. Homeowners won’t be able to sell because no one will be able to afford to buy after they learn what the flood insurance premium will be.
This is definitely a glitch in the law given that Congress allowed for a glidepath for almost every other provision related to rate increases.
The speaker before me mentioned Section 205 of the Biggert-Waters Act. That section states that the FEMA Administrator shall not provide flood insurance to prospective insureds at a less than actuarially sound rate on any property purchased after the date of enactment of the law. It is those eleven words in this Act that will devastate Florida’s economic rebound. Let me repeat that: Those eleven words will devastate Florida’s economic rebound.
We hope all of you will continue to let Congress know that they can make this right. But, their window of opportunity is short and there is a simple fix to this glitch in the law that contains no glidepath. It is as simple as delaying the implementation of the Act’s rate increase provisions for grandfathered and newly purchased properties pending FEMA’s report to Congress on the results of that affordability study that was required by Biggert-Waters.
My greatest fear, and probably one of the most important things I can say to you today, is that existing homeowners with a mortgage who have their flood insurance premiums escrowed could face foreclosure as they are unable to afford the increase in escrow required to cover the new flood premium. And, another round of foreclosures would be devastating.
Most Floridians do not know that we are a major donor state to the National Flood Insurance Program. Governor, as you indicated in your letter last week, since 1978 Floridians have paid $16.1 billion in premiums to the National Flood Insurance Program, however, Floridians have had approximately $4 billion returned to them in claims.
Thanks again, Governor, for reaching out to Florida’s federal delegation in your recent letter. They have a very short window to do something here. And, as you said in your letter, “this cannot be what Congress intended.” My larger concern, though, is that Congress can’t seem to agree on anything right now so we probably don’t have the luxury of waiting around for them to act.
It is now my pleasure to introduce to you Realtor Brandi Gabbard. She is chair-elect of the Pinellas Realtor Organization.