Need flood insurance? You might: 'Anywhere it rains, it can flood'
EUGENE, Ore. - Change is coming in the way homeowners pay for flood insurance.
FEMA will be releasing new flood zone maps in the next year or two.
If your house falls in that zone, you may have to start shelling out.
Likewise, if your home is currently listed in a flood zone, it potentially may not, decreasing your rates substantially.
Why is FEMA re-zoning and mapping flood zones?
According to local realtor and broker Jeanette Underwood of Windermere Real Estate in Lane County, FEMA is adjusting flood zones because the country has been taking the brunt of paying for natural disasters.
"You may not be paying flood insurance right now, or you may be paying flood insurance right now," Underwood said. "When the new rates and the new flood maps come out, things could change."
How does FEMA determine flood zone rates?
FEMA's "Flood Insurance Rate Map" or FIRM is an official map of a community that's on a floodplain or Special Flood Hazard Area. FEMA marks the Base Flood Elevations and the risk premium zones. FIRM is used to determine who must buy flood insurance and where floodplain development regulations apply.
Once approved, maps will be available online through the FEMA Maps Service Center.
Underwood says FEMA will decide how far above flood stage your base-floor living area will need to be.
"How far above flood stage they decide, whether it's a foot or four feet, that's going to affect whether you pay flood insurance."
Will I be affected?
Amy Graham, President of Oregon's Association of Realtors for 2014, says flood insurance is mandatory if you have a government-backed loan. Just about every loan is government-backed, especially if your lender is through a bank.
Graham says the maps have not been released yet, but it will likely affect people across the country.
"It affects all coastal areas and any flood zones, or river front properties throughout the state and nation."
Underwood says major rivers like the Willamette and Mckenzie are controlled by sophisticated dams, but areas along smaller rivers like Long Tom River, Mohawk River, Row River and even smaller creeks and streams will be affected.
Does this affect current homeowners or buyers?
Yes. It will affect buyers, sellers and current homeowners with government-backed mortgages.
Amy Graham recently sold a beachfront property for upward of $600,000. The seller was originally quoted $64,000 for flood insurance per year. Graham said he shopped around and found a quote for $1,300 per year.
Marie Due, principal broker at Barnhardt Associates, said lenders are anticipating the maps and are starting to raise rates.
It has already affected the housing market.
Underwood had buyers ready to close on a $100,000 home in Marcola until they saw their new rates.
"Flood insurance under the new rates for a $100,000 home would have been $186 per month, and that made it impossible for them to afford it."
The home was declared 4 feet below flood level.
The house is still on the market.
The neighbor's home is not affected. Underwood said the home's first floor is lifted above the current flooding level.
How can you protect yourself?
Graham said your insurance agent is your first line of protection.
"Maps can't be changed. They will have the information. You can't do this alone," Graham said.
She also said to shop around. The Lincoln City buyer was quoted upwards of $60,000 per year for flood insurance. "He was pretty savvy and found a much lower quote," she said.
Graham said on January 30, the Senate passed the Homeowner Flood Insurance Affordability Act of 2014.
"That bill, if passed by the House," she said, "will delay flood insurance rate increases for four years to give FEMA time to do affordability studies. And time for more accurate mapping to be completed."
This doesn't only apply to residential homes.
"Some businesses downtown may be affected, they're right on the flood plain," Graham said. "Buildings with basements or underground structures may not be affected, but ones that are base-level may have to pay higher rates."
Realtors said no one really knows what will happen when the maps are released.
"Anywhere it rains," Graham said, "it can flood."