FEMA updates could impact insurance requirements
By Maggie FitzRoy, Contributing Writer
The Mortgage Bankers Association of Jacksonville and the Florida Association of Mortgage Professionals held a joint luncheon and membership meeting last month to discuss pending changes to Federal Emergency Management Agency flood zone maps.
At the event, a panel of industry experts discussed the upcoming changes, with Tom Reber, branch sales manager of EverBank, acting as moderator.
The experts were Timothy Blackmon, vice president of surveying with IME Civil & Surveying LLC; Dan Arlington, building official with Atlantic Beach; Jennifer Fox, marketing director for Exacta Land Surveyors & Lien Search; and Jeff Stoneking, agency owner of Brightway Insurance.
“There are changes coming that FEMA is putting in place and we are educating members here about them,” MBA President Michelle Glass said before the meeting. “The subject matter is important to all of us.”
Reber led the discussion with an anecdote that explained when and why the subject became important to him.
At a recent closing, it was discovered the property that was being purchased was in a flood zone and flood insurance was needed.
The seller didn’t know the property was in a flood zone, because the FEMA maps had been changed since he bought it.
Reber said the buyer got upset because he was suddenly faced with buying flood insurance he didn’t know he would need.
When calls were quickly made to insurance companies for quotes, the first one was for $12,000 a year.
The closing was in jeopardy at that point, because the buyer balked at paying that. After more calls to other insurance agencies, the price came down to $2,000 a year, which the buyer was OK with. “It was a scary conversation,” Reber said.
Arlington explained that new maps are expected to go into effect in February and plans to update them already were in progress before Hurricane Matthew last fall.
He said when the last maps went into effect in 2013, many people in Atlantic Beach discovered they had to buy flood insurance. He said it is a good idea to “get ahead of the curve” and let people know changes are coming and they might be in a flood zone.
Flood plans and maps change because technology is allowing for greater accuracy in determining which areas are threatened by flooding, Arlington said.
“They are finding places that should have been in a flood zone” that previously were not, he added.
Other concerns also were raised during the question-and-answer session.
Stoneking pointed out a house not deemed to be in a flood zone when it was built might not be elevated enough to meet flood zone standards if the home’s status changes.
Even if a homeowner has flood insurance, their rates could skyrocket.
He said up until two years ago, the only flood insurance available was from FEMA. But state law now allows private insurance companies to offer it, and on average, private insurance rates are less.
“Technically, all of Florida is in a flood zone,” Stoneking said. “I’d be very cautious.”
Blackmon said his surveying company always advises if a home is in a borderline zone, the homeowner should have flood insurance.
Allen Touchton, branch manager with Skyline Home Loans, said after the meeting it is usually better for a homeowner to buy flood insurance before their home is rezoned, because having a policy in place usually makes it more affordable.
Once a home is rezoned, the mortgage lender will in most cases require them to get flood insurance, he said.
Glass said that as soon as FEMA makes the new maps available, MBA and FAMP will both put links to them on their websites.