Now that flood insurance reform has been signed into law, you need to understand what’s changed, what the new regulations are and how it will affect your business. CTAR’s Government Affairs Director, Ryan Castle, walks you through the changes this law creates, how your pending closings will be affected and when we can expect to see the full implementation of this law.

1. Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
NATIONAL FLOOD
INSURANCE PROGRAM
Legislative Update
April 2014
Ryan Castle
Government Affairs Director
Charleston Trident Association of REALTORS®

2. Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
What’s happened?
July 2012 – Biggert Waters (BW) passes
May 2013 – FEMA announces BW will be retroactive
June 2013 – NAR starts working on fix to flood insurance bill; Greenville, SC
REALTOR® Donna Smith heads up NAR PAG on flood insurance
October 2013 – Rate increases start taking effect for Pre-FIRM properties
January 2014 – Senate passes a 4 year delay
February 2014 – House passes BW overhaul bill; Senate follows suit
March 2014 – President signs BW overhaul bill

3. Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
This is NOT a DELAY!
This is a REFORM of Biggert-
Waters
Subject to laws Congress passes as the same with all tax rates and
other federal laws affecting real estate (Capital Gains example)
Still use SCR’s Flood Insurance Property Disclosure Form

4. Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
Buying a Pre-FIRM home/property
Sec. 205-Sale/New Policy Trigger
Below full risk rate
Original BW
Property moved to full risk
rate when triggered by a
property/new policy purchase
– meaning at point of sale full
risk rate was price
New law
Repeals Sec. 205-Sale/New Policy
Trigger (including the sale of second
home or business)
Returns to allowing the new owner
to assume the old policy at the
current rate (i.e. policy stays with
property, not owner)
Pre-FIRM properties start assuming rates on MAY 1st
.

5. Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
Annual Premium Increases for
owner-occupied Pre-FIRM properties
FEMA will calculate Subsidized Rate the way they always have calculated it yearly.
Subsidized rate = (Annual NFIP Expenses – Revenue from actuarial policyholders)/#Subsidized Policies
From that determination, Subsidized Rates will have a minimum increase and a maximum increase.
Second Home/Business: 25% increases until reach full risk (same as current law)
Prior to Biggert Waters
Capped Subsidized Rate
premium increases at 10% per
rate class
no cap per property
No Minimum Increase
Biggert Waters
Capped Subsidized Rate
premium increase at 20% per
rate class
No cap per individual property
No minimum increase
Post Biggert Waters
Caps Subsidized Rate premium
increase at 15% per rate class
18% cap per individual property
5% minimum increase

6. Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
Grandfathered Properties
Sec. 207-Remapping Trigger
Grandfathered: Post-firm homes that were built to compliance
at the time it was built but laws have changed since.
Original BW
5 year phase out of
grandfathered rates triggered
by when new flood maps are
adopted locally
Expected in coastal SC late
2014 to early 2015
New law
Repeals remapping and phase out
trigger AND
Restores Grandfathered properties
to how they were treated prior to
BW
Stays in flood zone it was built in
As flood zone rates increase rate will increase as
always has happened

7. Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
1% of Property’s Value
“…strive to minimize the number of policies with annual
premiums that exceed one percent of the total coverage
provided by the policy.”
For example, a house at $200,000 should not have a
premium over $2,000.
However, this language is NOT a requirement;
FEMA must only “strive” to do this.
Details will be in FEMA’s guidance on this issue

8. Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
Policy Assessment
for all properties that are not paying full risk rate
$25 assessment on all NFIP primary homes; $250 on the
businesses and second homes in the NFIP
The funds will be deposited in the NFIP reserve account created
by Biggert-Waters to build a cushion for future catastrophic
losses.

9. Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
Refunds
Must occur within 16 months
REFUNDS APPLY TO:
o Policyholders in high-risk areas who were required to pay their full-risk rate
after purchasing a new flood insurance policy on or after July 6, 2012.
REFUNDS DO NOT APPLY TO:
o Policyholders paying the 25 percent annual rate increases, as required by Congress in BW-
12, for a Pre-FIRM subsidized non-primary residence, business, Severe Repetitive Loss
property, or building that was substantially damaged or improved.
o Policyholders whose full-risk premium is less than the Pre-FIRM subsidized premium, or
who were not overcharged according to any retroactive revisions to the Pre-FIRM subsidized
rates required by the new law.

10. Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
Installment Payments for Premiums
The new law will allow monthly installment payments for premiums at the option
of the consumer.
Deductibles
Under BW, pre-FIRM deductibles for risks with building coverage of more than
$100,000 were to increase from $1,500 to $2,000. For similar post-FIRM risks, the
deductibles were to increase from $1,000 to $1,250.
These changes remain, but the new law also creates an optional deductible of
$10,000 for residential properties; previously there was a $5,000 deductible cap. If
chosen, a disclosure indicating that the policyholder is responsible for the out-of-
pocket losses must be included with the policy.
Deductibles, as always, though is more of a lender decision as to what they’ll allow
the borrower to have as a deductible.

11. Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
Home Improvement Fairness
Biggert-Waters phased-out subsidies for pre-FIRM properties that were “substantially
improved”. While historically the threshold to cross “substantially improved” was 50
percent of Fair Market Value (FMV), Biggert-Waters changed this to 30 percent FMV. The
new law changes the threshold back to 50 percent FMV.
Reimbursement for Map Appeals
The new law allows FEMA to utilize the National Flood Insurance Fund to reimburse
policyholders who successfully appeal a map determination. Biggert-Waters provided FEMA
the authority to reimburse homeowners for successful appeals of map findings, but
Congress has never appropriated funding for this purpose.
Flood Insurance Advocate
The law establishes a Flood Insurance Advocate within FEMA to answer current and
prospective policyholder questions about the flood mapping process and flood insurance
rates. The Flood Insurance Advocate will be responsible for assisting property owners
through the map appeals process, and improve outreach and coordination with local
officials, community leaders, and Congress.

12. Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
TAKEAWAYS
Reform, not a delay – fix to problem
No more Point of Sale flood insurance premium hikes
Pre-FIRM (subsidized) policies assumable on May 1st
Grandfathered rates will stay and not be phased out
with new maps
Still use SCR’s Flood Insurance Disclosure Form

13. Charleston Trident Association of
REALTORS®
Facebook.com/CharlestonRealtors
@ChasRealtors CharlestonRealtors.com
More Information
www.CharlestonRealtors.com/FloodInsurance
Ryan Castle
Government Affairs Director
Charleston Trident Association of REALTORS
Ryan@CharlestonRealtors.com
843.793.5212
@ryanfcastle
www.ryanfcastle.com