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Flood Insurance Rules Squeeze Some Homeowners

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Jeromy Range in front of his home in Falmouth, Va.
WAMU/Jonathan Wilson
Jeromy Range in front of his home in Falmouth, Va.

About a year ago, 38-year-old Jeromy Range and his wife decided to take the plunge and buy a house.

“One of the things that we did when we determined if we could afford to live here was we got a quote for our flood insurance,” Range says. “We did our budget out for the entire year to decide if we could afford to live here, and we determined at the time that we could.”

The flood insurance worked out to about $2,000 a year — no small amount — but, for the Ranges, doable. Then about a month ago, Range got a call from his insurance company, USAA.

“The lady is like, ‘Well, I’m really sorry to tell you this, but because of the new FEMA laws, with the Biggert-Waters Act, your flood insurance is going up to $32,000 a year. That’s $2,000 to $32,000,” he says. “And I say it twice, because every time I tell someone my flood insurance went up to $32,000, they instinctively think they misheard me.”

That’s a 1,500 percent increase — an amount that Range says would essentially guarantee the loss of his home, perhaps through foreclosure.

“My wife and I, we’ve worked hard to get a good credit score, and we never are late in any kind of payments, and this would basically destroy that,” he says.

The Biggert-Waters Act of 2012 required the National Flood Insurance Program — a partnership between the federal government and private insurance companies — to raise rates on older, high-risk homes. Almost everyone agreed the system needed an overhaul: It was $24 billion in debt.

Families who have lived in their homes since at least 2012 were guaranteed that their premiums wouldn’t go up more than 25 percent each year. But newly purchased homes, such as the Ranges’, would be getting their increases all at once.

“If this thing does not pass, our mortgages will go up to four, maybe even $5,000 a month — that’s just preposterous,” Range says.

Apparently, a lot of people in Congress agree, and now FEMA is set to cap rate increases for everyone at 15 to 18 percent a year. But there are plenty of people who say that by rolling back flood-insurance reform, Congress is putting the needs of a few homeowners ahead of sound fiscal and even environmental policy.

Jimmy Grande is Vice President of the National Association of Mutual Insurance Companies (NAMIC), a group that’s been staunchly opposed to using federal money to suppress rate increases across the board.

“You know, you have the realtors and the homebuilders with very powerful lobbies who benefit from the suppressed rates because they just want to sell the next house,” Grande says. “They don’t have to really worry about, ‘Is that house safe for you to live in?’”

Grande says there are some places where homes simply don’t belong. “There are certain parts of our land that we shouldn’t be living in — it’s not good for the environment,” he says. “We need certain runoff — we need wetlands to keep our coasts healthy. And you’re also putting somebody in harm’s way.”

Grande’s solution: Congress should simply write checks to those few homeowners seeing astronomical increases to help them offset the new rates. Otherwise, he says, Congress is continuing to hide the real risk of living in flood-prone areas.

“We don’t ever want to lose sight of the stories — there are families in true hardship in the Flood Insurance Program — but there’s just not all that many of them. We could help them without undoing the whole program,” he says.

Even Jeromy Range agrees that this week’s supposed solution is at best a short-term fix. Range says even with that 18 percent cap, in four years, his flood insurance will cost him an extra $100 each month — more than he can afford.

“These homes have been here for 200 years,” Range says. “Why should I pay the maximum FEMA price for possibly replacing my home when it’s been here for 200 years? It’s not gonna get washed away.”

If nothing changes, the Range family will likely have to find a new source of income, or abandon their dream house in historic Falmouth, Va.

[Music: "Flood" by Throwing Muses from University]

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