Phase-in of actuarial rates for certain pre-FIRM properties

(a)

In General

Section 1308(c) of the National Flood Insurance Act of 1968 (42 U.S.C. 4015(c)) is amended— (1)by redesignating paragraph (2) as paragraph (3); and (2)by inserting after paragraph (1) the following new paragraph:

(2)

Recently purchased pre-FIRM single family properties used as principal residences

Any single family property that is used as a principal residence that— (A)has been constructed or substantially improved and for which such construction or improvement was started, as determined by the Director, before December 31, 1974, or before the effective date of the initial rate map published by the Director under paragraph (2) of section 1360 for the area in which such property is located, whichever is later; and (B)is purchased— (i)after the date of enactment of this paragraph; and (ii)for not less than $600,000.

(b)

Technical Amendments

Section 1308(c) of the National Flood Insurance Act of 1968 (42 U.S.C. 4015(c)) is amended— (1)in the matter preceding paragraph (1), by striking the limitations provided under paragraphs (1) and (2) and inserting subsection (e); and (2)in paragraph (1), by striking , except and all that follows through subsection (e). (c)

Effective Date and Transition

(1)

Effective date

The amendments made by subsections (a) and (b) shall apply beginning on January 1, 2011, except as provided in paragraph (2) of this subsection. (2)

Transition for properties covered by flood insurance upon effective date

(A)

Increase of rates over time

In the case of any property described in paragraph (2) of section 1308(c) of the National Flood Insurance Act of 1968, as amended by subsection (a) of this section, that, as of the effective date under paragraph (1) of this subsection, is covered under a policy for flood insurance made available under the national flood insurance program for which the chargeable premium rates are less than the applicable estimated risk premium rate under section 1307(a)(1) for the area in which the property is located, the Director of the Federal Emergency Management Agency shall increase the chargeable premium rates for such property over time to such applicable estimated risk premium rate under section 1307(a)(1). (B)

Annual increase

Such increase shall be made by increasing the chargeable premium rates for the property (after application of any increase in the premium rates otherwise applicable to such property), once during the 12-month period that begins upon the effective date under paragraph (1) of this subsection, and once every 12 months thereafter until such increase is accomplished, by 15 percent (or such lesser amount as may be necessary so that the chargeable rate does not exceed such applicable estimated risk premium rate or to comply with subparagraph (C)). Any increase in chargeable premium rates for a property pursuant to this paragraph shall not be considered for purposes of the limitation under section 1308(e) of such Act. (C)

Full actuarial rates

The provisions of paragraph (2) of such section 1308(c) shall apply to such a property upon the accomplishment of the increase under this paragraph and thereafter.