[Congressional Record Volume 160, Number 4 (Wednesday, January 8, 2014)]
[House]
[Pages H56-H62]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
HOMEOWNER FLOOD INSURANCE AFFORDABILITY ACT
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 3, 2013, the gentleman from Pennsylvania (Mr. Marino) is
recognized for 60 minutes as the designee of the majority leader.
General Leave
Mr. MARINO. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days in which to revise and extend their remarks and
include extraneous material on the subject of my Special Order.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Pennsylvania?
There was no objection.
Mr. MARINO. Mr. Speaker, I rise today to continue to bring attention
to an issue that is devastating the people of Pennsylvania--across the
10th District and other districts in Pennsylvania--and across this
country. It is the implementation of the Biggert-Waters Flood Insurance
Reform Act of 2012.
It has unintentionally burdened lower- and middle class homeowners
and small businesses. Rates have increased astronomically. Biggert-
Waters had the best of intentions. However, FEMA's methodology is
severely flawed, and FEMA failed to warn Congress.
This afternoon, I am joined by a bipartisan group of my colleagues
from across the country; and while the details of a proposed solution
may vary, I believe we are unified behind the goal of protecting the
livelihoods and investments of hardworking Americans.
Our homes are often our most valuable assets in that they allow us to
retire; they allow us to send our children to college; they allow us to
leave something behind for our children and our grandchildren for a
better life. These homes form the backbone of riverside and coastal
working-class communities. The downfall of these residential real
estate markets will be catastrophic. Homeowners will lose their total
investments in their properties. Small businesses will lose their
customers, not to mention their real estate. Small banks will go out of
business because people are not able to pay the insurance that the
mortgages call for. The communities left behind will no longer have an
adequate tax base to fund basic services.
I believe the best solution right now is to repeal Biggert-Waters in
its entirety and to start again from square one. Authors of the law on
the House Financial Services Committee intended to stabilize the
National Flood Insurance Program, but this law has disproportionately
affected low- and middle class homeowners who cannot afford these
premiums.
Although we here in Congress tend to think in abstract terms, I want
to share some of the stories I have heard from my neighbors back home
in the 10th Congressional District of Pennsylvania.
Jeff and Erica Waldman purchased a house in Muncy, Pennsylvania.
Their flood insurance premium was initially $900 per year. Now they are
being told to pay by the end of last year--the 31st, a few days ago--
$9,000 a year for flood insurance--up front. Jeff and Erica are
frustrated about the lack of information they were given and are days
away from losing their home as we speak. We cannot solely place this
burden on people like Jeff and Erica.
Laurie and Michael Portanova purchased three historic properties in
Jersey Shore, Pennsylvania, last year, hoping that their new business
would rejuvenate the Main Street feel for the borough. Their flood
insurance premium per year was $2,800. They received a notice that they
had to pay $40,000 by the end of the year for flood insurance, by the
end of 2013. They are close to walking away from their investments and
taking a huge loss. This would also have devastating consequences on
other property owners in Jersey Shore, who will have an additional tax
burden if homeowners in the area are not able to keep their homes
because they are not able to pay the flood insurance.
Mr. Speaker, at this time, I yield to the gentleman from
Pennsylvania, Congressman Thompson.
Mr. THOMPSON of Pennsylvania. Mr. Speaker, I appreciate the gentleman
for yielding, and I appreciate my good friend from Pennsylvania for
hosting this Special Order on a very serious issue.
Biggert-Waters, I think, was a piece of legislation that we all had
great hopes for in terms of the National Flood Insurance Program. As
the commercial insurance industry really exited the insuring of flood
risk, it was left to the Federal Government; and with the recent
flooding, obviously, over the past number of years, that fund has been
decimated. Last year, on a bipartisan basis, Congress passed the Flood
Insurance Reform Act of 2012. The measure included some long overdue
reforms that strengthened the financial solvency and administrative
efficiency of the National Flood Insurance Program.
The rationale for the 2012 law was the need for the National Flood
Insurance Program to more accurately reflect flood risk. Historically,
most low-risk States have subsidized higher risk States, mostly
coastal. Similarly, low-risk areas within the States have tended to
subsidize those areas with a higher risk, more prone to flooding. The
linchpin of the 2012 law, however, was to use true actuarial rates in
order to prevent very low-risk areas from subsidizing moderate to high-
risk areas. The unintended consequences have been drastic premium
increases for those plans that were traditionally subsidized by the
National Flood Insurance Program.
Under the law, Congress mandated that the Federal Emergency
Management Agency complete an affordability study to further evaluate
any unintended consequences as a result of the changes. The study was
to be completed before the rate increase went into effect. I want to
repeat that. The law that was passed in 2012 had a safeguard in there
that the administration, through the agency FEMA, was to do
affordability studies before rates went up. That is not what happened,
Mr. Speaker. That would have been critical to understanding the full
scope of the new risk model. FEMA has failed to complete the
affordability study that was required under the law. Additionally,
there remains a huge concern that FEMA does not have the data that it
needs to accurately determine risk under this new policy regime and
that it is incapable of creating a new mapping system that truly
reflects true actuarial rates.
Now, while 80 percent of the policyholders in this country will not
see an increase as a result of the new policy, a small portion of the
properties in this country--actually, I think it is a significant
portion of properties--are being hit with staggering increases. This is
a serious concern for communities and individuals across the country,
including many from the Fifth District of Pennsylvania.
Just recently, I have heard from counties, communities and homeowners
from Cameron County and Erie County--Clinton, McKean, Crawford, Potter,
Huntington, and Centre--and
[[Page H57]]
that is just in recent days. I think we are at risk of creating ghost
towns as homes have lost so much value. You may be able to afford the
mortgage, but you can't afford the flood insurance. As my good friend
said, the number one assets that individuals have in their lives are
their properties--their homes, their real estate. When it comes time to
be able to sell them, they are not able to liquidate them because there
is no one out there who is able to buy. So we are really at risk of
creating these ghost towns unless we make the necessary changes, I
think, to have the administration comply with the law as it was passed
in 2012 in terms of affordability rates.
Colleagues on both sides of the aisle have come together to correct
this critically important issue. I am an original cosponsors of the
Homeowner Flood Insurance Affordability Act, H.R. 3370. I know my good
friend Mr. Marino has introduced another bill that would completely
repeal Biggert-Waters, most recently introduced within the past couple
of days.
H.R. 3370 is a bill to terminate the rate increase under the Flood
Insurance Reform Act of 2012 until 2 years after the Federal Emergency
Management completes the rate affordability study originally mandated
under the law. The bill also makes structural changes to FEMA to ensure
that there are advocates for homeowners when flood maps are drawn or
adjusted.
Mr. Speaker, improving the financial viability of the Nation's flood
insurance program while ensuring that program protects those it was
designed to support is something every Member of this body should
support.
I encourage my colleagues to join in this commonsense effort to
protect and improve our Nation's flood insurance program but also to
make sure that our real estate market remains strong and viable and
that that important asset that individuals have remains able to be
bought and sold.
I thank the gentleman for hosting this Special Order.
{time} 1730
Mr. MARINO. Thank you, Congressman Thompson.
I would like to add a true story happening right now in my district
due to these increases in rates. Nikki Burrows met her husband, bought
their home in Muncy in 2006. Insurance premiums more than doubled from
$862 to $1,750; but because the Burrows had suffered flood damage from
Tropical Storm Lee in 2011, they are subject to an additional 20
percent on their premiums until they max out. Add an annual fee of
$4,000 annually. So, in essence, they went from $862 a year to $4,000 a
year because they were hit in one of the floods.
These Burrows are trapped. These townships and small towns along the
rivers are trapped into a situation where the average mean income is
about $37,000. That's before taxes. That's before mortgage payment.
That's before food for the kids. That's before other insurances. Yet
these people are to come up with $4,000, $6,000, $8,000 and $10,000 up
front, per year, for flood insurance because of the unintended
consequences of Biggert-Waters.
At this time, I yield to the gentleman from Massachusetts,
Congressman Keating, my colleague across the aisle and a former
prosecutor.
Mr. KEATING. I thank the gentleman for yielding.
In an all-too-common occurrence in this Nation today, the Murphy
family in Wareham, Massachusetts, has seen flood insurance premiums
rise dramatically, from $500 annually in their instance to $5,000, a
10-time amount of an increase.
Anthony Frangie who is a Realtor at the South Shore portion of
Massachusetts has seen multiple home sales fall through specifically
because the flood insurance premiums were too high. This is a real
estate industry, not just in my home State, but across the country,
that has been reeling as a result of the worst downturn in the housing
industry in recent years that our country has ever experienced.
They are beginning to come forward, sales are occurring. One of our
most important industries, our housing industry is beginning to drive
our economy forward, yet this is going to drive us back. The lending
institutions that support this in States like Florida, where the
inventory was so high, where they had houses that people walked away
from because they couldn't afford and they couldn't sell themselves,
now they have experienced improvement. But this is going to set them
back, and it is going hurt our economy in the process, not just
regionally, but nationally.
Last year, the owners of Haddad's Ocean Cafe in the community I
represent of Marshfield renovated their restaurant to reflect the
current flood requirements, and they went further. They even went
higher when they made these kind of very expensive renovations, going
above what was needed. Today, with the new flood maps, they must pay
millions of dollars in additional renovations to further raise the
building even higher or pay flood insurance premiums far in excess of
$30,000 annually, something that endangers their ability to conduct
basic business.
These are just a few of the numerous examples and challenges facing
homeowners and businesses that have arisen through the implementation
of the new flood insurance changes. FEMA, at hearings that we have had
here in answering to this issue about the implementation, has said they
perceive their job to overestimate the impact of this. Clearly, there's
something wrong with the implementation of this law.
Our office has had individual after individual come forward to us
with things that affect their own person and their own homes looking
for help. Some of them that can afford it have moved forward with
appeals. Many of those appeals have been successful. Yet they have had
to invest and risk thousands of dollars in elevation studies in terms
of site reviews just to bring their case forward.
Communities have gone together and brought forth appeals for the
entire community. One of those communities in my district went forward;
and they were so detailed, I looked at what they said and decided to
bring it to the attention and to ask the advice and expertise of one of
the Nation's top coastal expert groups. That's the University of
Massachusetts School of Marine Science and Technology in Dartmouth,
Massachusetts.
What they determined with their review was that the methodology used
to determine these maps was faulty. In fact, one of the things they
found was the wave structure that results in flooding is the result of
storm surges and violent storms in the east and Atlantic coast and
responsible for the floods. That wasn't used as the methodology to
determine what the impact would be on the maps and what the cost would
be for flood insurance on all these homeowners. Indeed, they used the
methodology based on the Pacific Ocean, with a longer, slower wave
structure; and the scientists and coastal engineers that reviewed this
for us said what they did, determined to be the maps, was based on
faulty science.
Now individuals are facing enormous burdens, as my colleagues have so
aptly demonstrated. In terms of annual payments, that could be the
difference between being able to stay in your own home, live in your
own home, or not; annual payments that affect many people on fixed
income who had never, ever budgeted for this and are throwing them into
the most difficult decisions of how they are going to heat their home,
how they are going to afford to live, what they are going to do. Even
younger people who are using or hoping to use the equity on their home
to pay for their kids' college education are finding that, instead of
having this go towards that important goal in their life, it is going
to pay for flood insurance.
Now, this is an important thing, not only how it affects people on
annual payments, but what this also does, this affects and can affect
the entire value of their home. In fact, real estate people are finding
as they are going to sell the homes, that the homes that were valued
one way are now dramatically being reduced because of the cost of
annual flood insurance attached to that home.
So what we have really is a taking, as a result of the
implementation, a taking of people's assets, of their savings, of the
roof over their head, of the number one financial asset they have in
their lives. Clearly, this is not the role of government to effectuate
this kind of taking, because maybe the math is totally wrong and they
shouldn't be included at all or maybe it
[[Page H58]]
is off just 1 foot and it has this kind of devastating financial and
personal impact. That's why I have joined my colleagues in being one of
the original sponsors of the Homeowner Flood Insurance Affordability
Act
Now this is done in a House that is often challenged in terms of
working across the aisle, in terms of working in a bipartisan manner.
But in this instance, it is a sterling example of how we have worked
together across the aisle in a common interest, realizing how important
this is to the people we represent, realizing how important this is to
the real estate industry nationally, realizing how important this is to
the lending institutions nationally and making sure that government
isn't acting in a way that is actually seizing their personal assets
and their life savings.
We have an obligation, having worked together so hard and, in my
opinion, achieving a very significant majority of the Members of this
House of Representatives to pass this kind of delay, to get it right
and make sure we are treating people fairly, that it is inherent that
this bill be brought to the floor for a vote and be brought to the
floor quickly for a vote. We were expecting Senate action in this just
in the next few weeks.
It is my hope, it is my plea, it is our obligation as the court of
last resort representing these people who have so much in jeopardy
right now, to bring it to the floor, to get a vote, to pass it, to get
a delay to be able to make sure we go to FEMA and say, You are dealing
with people's livelihoods. You have an obligation to get it right and
get it done. And when they do, this bill will also allow us here in
Congress to review it and make sure the implementation is continued in
the correct manner.
Let's move forward on this very important issue as soon as possible.
Let's show this as one more example, during these very challenging
times politically, of what happens when this House listens to the
people in their district and around the country, works together to get
something done and does the right thing. It is my fervent hope that we
can do this quickly.
Mr. MARINO. Thank you, Congressman Keating.
I would like to reiterate the devastating effects that these premiums
are having on the values of homes, affecting retirement plans,
retirement plans for a lot of our seniors in the district. Tom Rishel,
Tom is out of a pension. He does not have a retirement plan, so he
invested in several properties in Muncy, Pennsylvania, hoping to one
day resell the properties. His premium, on just one property, has
jumped from $600 a year to over $9,500 a year. Tom, who is 70 years
old, fears his properties are worthless and his dreams of retirement
have been destroyed.
Mr. Speaker, at this time, I yield to the gentleman from Mississippi,
Congressman Palazzo.
Mr. PALAZZO. Thank you, Congressman, and thank you so much for
putting this Special Order together this evening for us to talk about
the devastating effects the Biggert-Waters Act is going to have on
flood insurance premiums just not along coastal areas, but all across
America.
For more than 40 years, residents who have lived in flood-prone areas
have paid into the National Flood Insurance Program because virtually
no private flood insurance market existed. The issues I and my
colleagues have spent so much time addressing over the last year affect
these 5 million NFIP policyholders.
What many Americans do not realize is that they could be the next
flood victim, and they could be the next victim of these drastic flood
insurance hikes and flawed FEMA policies.
According to FEMA Director Craig Fugate, 40 percent of the U.S.
population lives in counties that border the ocean or the Great Lakes
and are directly or indirectly affected by flood risk, and most U.S.
counties contain rivers and streams that present flood hazards. Forty
percent of the U.S. population--that's more than 126 million
Americans--could be affected by these issues in the coming years.
This map shows exactly where you can find NFIP policyholders. We are
not just talking about a few people living in coastal areas. This isn't
just Mississippi, Louisiana, New York, New Jersey, or Florida's
problem. This map hasn't even been updated to include those affected by
the recent flooding in Colorado. We are talking about millions of
people across America in every single State and just about every single
congressional district who will be impacted by these drastic rate
increases.
The Biggert-Waters Act of 2012 was passed with the intention of
insuring that the program remained solvent for these policyholders to
ensure that it is there for the people who have paid into the system
when a disaster strikes. It was never intended to make rates so
unaffordable that flood insurance is no longer attainable for these
policyholders. Yet when you look at what is happening now and the way
FEMA is implementing the law, that's exactly what we are seeing.
There are those who have said these people are just a bunch of
wealthy waterfront homeowners. That is simply not true. I can tell you
that's not the case in my district. I am hearing from teachers,
veterans, fishermen, people who work at the shipyards in support of our
Navy. These are everyday Americans, some of whom live 50 or 100 miles
or more inland. These are folks who have been responsible in
maintaining flood insurance policies for years and sunken untold
thousands of dollars of their own funds into their community's recovery
from Hurricane Katrina.
They built back to higher FEMA standards, many of them invested in
mitigation against future risk. They used every tool at their disposal
and went to great lengths and great costs to comply with the law and do
their part. Now they are being punished for doing that. They are being
hit with astronomical rate increases overnight, or worse, they are
unable to get straight answers from FEMA or from their flood insurance
agents who are looking to FEMA for answers.
Many are retirement age. One bank in my district has estimated that
at least 400 elderly homeowners are facing rate increases that are so
drastic that it could force them into foreclose.
Take Cheryl, a retired special education teacher married to Gerald, a
retired aluminum plant worker and a Navy veteran. She says:
Please don't think that we live in a waterfront home. We
live in an older neighborhood, miles inland.
She tells me that for 11 months they lived in a camper while working
to rebuild, taking ``extra precautions'' and meeting the demands of
inspectors and permits throughout the process.
``We felt proud to be part of the rebuilding of the Mississippi Gulf
Coast'' she says. But she also tells me, ``A large increase could bury
us.''
Another military retiree couple on fixed incomes writes that their
flood insurance rates have been estimated to rise from $400 a year to
at least $4,000 a year. He says: ``Despite doing our `homework' prior
to purchase, putting a considerable down payment on the home, doing due
diligence following the storm by repairing our home'' that flood map
changes and increasing flood insurance rates have put them in the
position to possibly lose their home with no fallback.
Linda, a 65-year old single woman, tells me she hopes to retire after
40 years working as a teacher. She says:
Like so many others, I rebuilt my home after Katrina
following the guidelines of then current flood maps. If the
flood rates go to the proposed levels there's no way I can
afford to keep my home. I have worked all of my life,
contributed to the community I live in, followed the rules,
paid my debts. Now I am faced with losing my home, my
retirement, and my sense of security.
{time} 1745
These are just a few examples of how these rate increases are
affecting everyday Mississippians. Millions more like them are all
across the Nation, and some don't even realize the storm that is
coming.
We are not just talking about a few folks along the coast. We are not
talking about wealthy, waterfront homeowners looking for a taxpayer
handout. Anyone who says otherwise is incredibly misinformed or
blatantly misleading the American people.
These people, they are the reason we are here today. They are the
reason that Republicans and Democrats from every corner of the country
are supporting our efforts. We all share the same goal of ensuring
flood insurance remains affordable and available to those who need it.
[[Page H59]]
In this body, we have acted to make compassionate reforms, while
keeping this program fiscally sound. We have worked to halt rate
increases, address unintended consequences, and hold FEMA accountable
for questionable methods and flawed implementation.
We will continue this fight for those who have been caught in the
cracks through no fault of their own, for hardworking, everyday
Americans who have followed all the rules and tried to do everything
right. Now, we have a responsibility to make this right, and we will
not stop until the job is finished.
Mr. MARINO. Thank you, Congressman Palazzo. Your map says it all.
After speaking with many constituents during the recess, including
five town halls that I held, I believe that many homeowners who have
seen their rates increase were not even aware that the National Flood
Insurance Program rates were partially subsidized by the Federal
Government.
As the Congressman just said, please do not think that this pertains
to California coast and the Pacific alone, or New Jersey or New York
coastal. This affects people all across the United States.
Just in the State of Pennsylvania alone, we are not on a coast, we
are in by several hundred miles, there are several thousand miles of
waterways, rivers, creeks, streams.
Just to give you an example, in one of the town meetings, I asked
Jeff and his wife--Jeff is from Muncie. Jeff and his wife bought a
house, paid it off early, paid their taxes, kept their insurance up.
Again, their insurance is going up from about $600 a year to $11,000 a
year.
I said to Jeff, when you were at your closing, and the realtor is
sitting with you, and the lawyer is sitting with you, and the bank is
sitting with you, they came out to you and said, okay, now we need a
check for the flood insurance because you have a federally-backed loan
and you are in a flood area. So he wrote out a check for 6 or 700
bucks.
But I said, at that point, did anyone say to you that two-thirds of
the cost of the flood insurance is subsidized by the Federal
Government? He said, never.
I said, did anyone say to you that that subsidy could go away some
day? Never.
Did anyone tell you that the rates were going up because of that
subsidy? Never.
So it is not fair to the American people who are not told ahead of
time--this is before recent closings--and they have the rug pulled out
from under them.
So we are saying, in essence--and again, this is an unintended
consequence of Biggert-Waters--FEMA did not give us the right
information. I believe they held information back.
We are saying to the American people who are on $35,000 a year or
$40,000 a year annual income, who have to pay $10,000 up front, you
know something? We had a subsidy for you yesterday, but guess what? It
is not there today, and it is too bad that you may lose your house.
We cannot let that happen.
Now, it gives me great pleasure to yield to the gentleman from New
York, Congressman Grimm.
Mr. GRIMM. Mr. Speaker, I thank my colleague for the opportunity to
speak today, and for his hard work on this important issue.
I rise today to discuss this urgent need for Congress to act as
quickly as possible to delay these skyrocketing flood insurance
premiums that right now are absolutely crippling homeowners in my
district of Staten Island and Brooklyn, as well as across this entire
great Nation.
In 2012 we all know that Congress passed the Biggert-Waters Flood
Insurance Reform Act, and that was an attempt to stabilize the National
Flood Insurance Program. That program does have problems. It finds
itself in about $30 billion of debt.
While well-intentioned, this law has had absolutely devastating
effects on homeowners across the country. They are seeing their
premiums increased not just by hundreds, but in many cases, by
thousands of percent each year, with more increases to come into the
future.
In my district alone, I met with hundreds of concerned citizens,
homeowners. I have a senior who came to me with her bill for the new
flood insurance and her old bill. The premium was $2,200 a year, and
the new bill was $28,000. She is on a fixed income. She is not in a
position to pay $28,000 a year.
Unfortunately for her, she can't sell the property because the
property's value doesn't warrant such an extravagant flood insurance
premium, so no one will buy it, so she is trapped.
I had a working-class family come to me and show me a bill for
$37,000. This is a working-class family. That was their flood insurance
premium.
Again, what does that mean?
It means they are trapped because they can't sell the house. No one's
going to buy a modest home for 2 or $300,000 with flood insurance of
$37,000 a year.
So this situation cannot be allowed to continue, and it cannot be
unaddressed.
Last year, my district and the entire Northeast was devastated by
Superstorm Sandy. Tens of thousands of my constituents found themselves
actually homeless for the first time in their lives. Their lives were
completely turned upside down. They were wondering whether they would
rebuild at all, how they were going to move forward.
Many of them literally lost everything they have ever known. Every
worldly possession was gone. They knew then, as we do now, it would be
years before their lives would return to any form of normalcy.
Many of these people, unfortunately, still have not moved back into
their homes. Many of them are struggling to rebuild, as we speak right
now.
So to ask these victims of a natural disaster, who find themselves in
a absolutely horrible position, through no fault of their own, to pay
upwards of $15,000 a year or more in flood insurance premiums so soon
after a natural disaster took everything from them, amounts to nothing
more than them being victimized again.
If these premiums continue to go into effect, many of my constituents
will find themselves unable to pay both their mortgage and their flood
insurance. Their property will, in best case scenario, lose
considerable value, but in the worst case scenario, become completely
worthless.
This is unacceptable. To many Americans, their home is the largest
asset they can ever own in their lifetime. To essentially destroy the
value of those assets through flood insurance premium increases amounts
to one of the largest takings of private property in U.S. history.
Thankfully, there is a solution. There is a solution that has been
proposed in both Houses of Congress, and which I am very proud to say,
I am one of the lead sponsors of, H.R. 3370, the Homeowner Flood
Insurance Affordability Act, which would halt these draconian rate
increases.
As of today, I can report that this commonsense legislation has over
170 bipartisan cosponsors, and that support is growing every single
day.
This legislation simply would delay these rate increases for up to 4
years, giving FEMA time to both complete the affordability study
mandated under Biggert-Waters and to propose a framework to Congress to
maintain the long-term affordability of flood insurance. That will give
Congress the time to consider their proposals.
If long-term affordability of flood insurance is not taken into
account when setting future premiums, many Americans are simply going
to stop paying for this important coverage. They are just not going to
be able to do it.
This will only serve to damage the fiscal soundness of the National
Flood Insurance Program over the long term. An expansion in the number
of uninsured homes will only increase the direct cost to the Federal
Government for future natural disasters.
It is common sense. It is mathematics. If people don't pay in to the
program, the cost to the Federal Government will go up the next time
there is a natural disaster. It is that simple.
So, in closing, I would like to urge my colleagues to join us in
supporting this vital legislation. The sooner that we act to delay
these flood insurance rate increases, the sooner we can bring
stability, not only to the real estate market, but to our fragile
economy, and we will be bringing much-needed relief to extremely
nervous homeowners across this entire great Nation.
I thank my friend from Pennsylvania.
[[Page H60]]
Mr. MARINO. Mr. Speaker, how much time do I have remaining?
The SPEAKER pro tempore (Mr. Yoho). The gentleman has 25 minutes
remaining.
Mr. MARINO. Mr. Speaker, I hold in my hand here a report, a statement
from the National Association of Realtors.
Now, a moment ago I quoted realtors being at a closing and lawyers
being at a closing and banks being at a closing, small banks. These
people are informing me they never were told about these increases. I
want to read a small section here from their statement dated November
19, 2013.
There is a subtitle of, Home buyers were not warned. I quote:
Because FEMA delayed, then retroactively applied, the
purchase provisions in section 205, many home buyers,
specifically, those who bought between the enactment of
Biggert-Waters and March 12 of 2013, were not warned of rate
increases before purchasing their properties. Flood insurance
policies were not labeled as subsidies.
It is not their fault.
Mr. Speaker, at this time it gives me pleasure to yield to the
gentleman from Louisiana, Congressman Cassidy.
Mr. CASSIDY. Mr. Speaker, I rise in support of the reform the
Biggert-Waters Act. Let's first point out that the flood insurance
program was reformed under Biggert-Waters with the goal to make it both
affordable and accessible. It did indeed make flood insurance
accessible, but it is being implemented in such a way as to make it
unaffordable.
Now, the question is: Is this, as some people called it, a bailout
for vacation homes for the rich people?
Is it going to improve the solvency of the program?
Yet, somehow do we have to see how these reforms play out before we
reform once more?
Let's address each of these. This will do absolutely nothing for the
solvency of the National Flood Insurance Program. Indeed, it is
guaranteed to make it insolvent.
FEMA estimates that for every 10 percent increase in a premium, you
have a 1 percent decrease in the number of people purchasing that
policy. Do the math. Somebody whose policy is now $700, if it rises to
$7,000, they have a basically 100 percent chance of dropping their
policy.
When that happens, FEMA still has to cover their fixed costs. Those
fixed costs are concentrated under fewer and fewer subscribers to the
insurance policy, which means that even more people get to the point
where they can no longer afford this policy, which means, that, again,
that fixed cost is concentrated further. You have entered the death
spiral of a program, so the National Flood Insurance Program dies. That
will happen, under the assumptions used by CBO for these estimates.
Now, some would say, wait a second. FEMA actually had some good
reforms to work with. That is true, but they are not really
implementing them.
FEMA is doing their few flood maps with what is called a no levee
analysis. If the Army Corps of Engineers has not certified a flood
control structure, FEMA pretends it is not there.
Now, Lafourche Parish in south Louisiana has a levee they built
themselves, and they have pictures; on the one side they have
floodwaters, and on the other side they have dry land with flowers.
Those levees clearly work, but because they are not Army Corps of
Engineers certified, Lafourche Parish gets no credit.
Jefferson Parish, a suburb of New Orleans, has big pumps to help
reduce floodwaters, and yet FEMA does not include the efficacy of these
in their flood maps.
This no levee analysis was not supposed to be part of Biggert-Waters,
but that is how the program is being implemented.
{time} 1800
Now, is this a bailout for rich people? The people in Louisiana who
will benefit from reforming our current process, which is to say suffer
under Biggert-Waters, as currently crafted, are working people. They
work in the refineries that provide the gasoline for the rest of the
Nation. Their homes are $120,000 to $220,000. These are not rich people
insuring vacation homes. These are folks in their primary residences--
in many cases, homes that have never flooded but, in many cases, homes
that would suffer under this program.
And that leads me to the harm to the economy that will occur. The
uncertainty of the cost of flood insurance is freezing real estate
markets. Homebuilders have no market for the homes that they wish to
build. There is a cratering of the bank lending. Indeed, there are
reports of people taking their keys into the bank, dropping those keys
on a desk, unable to afford the flood insurance, therefore unable to
keep their mortgage so walking away from the home that they are
attempting to purchase.
The impact upon the rest of the country? Most of the refined gasoline
in the rest of the country is refined on the gulf coast, Louisiana, and
in Texas. Those workers cannot afford to keep the homes that allow them
to work in these refineries. There is an economic impact both locally
in the State but it, indeed, goes nationwide. Flood insurance should be
accessible. It should be affordable. Biggert-Waters needs to be further
reformed in order to allow both.
Mr. MARINO. Thank you, Congressman Cassidy.
Mr. Speaker, I represent 15 counties in the State of Pennsylvania;
and I hold in my hand here a petition signed by over 1,000 people just
from my county, Wyoming County, who are faced with this disaster. And
most of these people have a combined income--before taxes--of less than
$40,000 a year.
Mr. Speaker, at this time, it is my pleasure to introduce the
gentleman from Pennsylvania, Congressman Fitzpatrick.
Mr. FITZPATRICK. I thank my colleague from the Commonwealth of
Pennsylvania (Mr. Marino) for organizing this Special Order here this
evening.
And I know that Representative Marino, like myself, is hearing from
our constituents back home in Pennsylvania. They live, many of them, in
areas that are surrounded by properties that are habitually and
repetitively flooded. They pay their flood insurance premiums
faithfully each and every year, and they are being negatively impacted
by FEMA's implementation of the flood insurance reforms that occurred.
Last year, the reforms to the flood insurance program were passed
because, since 2006, the Government Accountability Office has warned
that the program was putting taxpayers at a high risk because of losses
from Katrina back in 2005 and subsequent disasters. And since then, the
program has been subsidized by the taxpayers and currently owes the
Treasury--we heard earlier this evening perhaps as much as $30 billion.
And as the GAO stated, these risks are the result of structural
weaknesses and how the rate structure provides funding to the program
itself. As a result of this, the House and the Senate came together,
and they reformed the program in some very important ways.
However, just because the National Flood Insurance Program was in
desperate need of reform does not mean that we should just simply walk
away and consider our jobs to be done. There are families across the
country and in my district who are suffering from what they refer to as
rate shock. I have heard from homeowners; I have heard from senior
citizens who have lived in their homes for decades, trying to sell
their homes in retirement. I have heard from young couples, newly
married, first-time home buyers who have encountered significant
challenges while trying to either sell their homes or purchase their
first home. Some families are facing increases of up to 500 percent or
more, and we heard about some of those examples tonight.
My office is working with many constituents, including one senior
citizen from the section of Bristol Township, a beautiful section, a
working-class neighborhood called Croydon, subject to some flooding.
This homeowner raised her family, lived in the home for decades and now
in her retirement wants to sell the asset she has in retirement, her
home. And because the rates have been significantly increased and
increased sort of going over a cliff--not over time but all at once--
many potential buyers have walked away from her property and just said
that they simply can't afford to purchase the property. She can't
afford to sell the property. In her senior years,
[[Page H61]]
that dream of retirement, she has been trapped in her home that she
wanted to sell and move on into her retirement.
One possible solution is to more gently phase in the rate
adjustments. Another would be to just freeze them outright while we
work on a longer-term solution. Either way, I look forward to working
with my colleagues, including those speaking here this evening. We can
find a way to move forward with crucial reforms to a very important
program while still protecting the families that we represent from
reductions in the values of the homes that may very well be the only
asset that they have or were counting on in their retirement.
So with that, Mr. Marino, I thank you for your interest and concern
for our mutual constituents back home in Pennsylvania on this issue.
Mr. MARINO. Thank you, Congressman Fitzpatrick.
Mr. Speaker, I now have the honor of introducing the gentlelady from
Florida, Congresswoman Ros-Lehtinen.
Ms. ROS-LEHTINEN. Mr. Speaker, I thank the gentleman from
Pennsylvania (Mr. Marino) for an incredible job of leading this effort.
Flooding is the Nation's number one disaster. Most insurance
companies do not offer their own flood insurance, and standard
homeowners' insurance policies do not cover flooding. Yet, Mr. Speaker,
flood insurance is required to purchase a home in a flood plain in
order to receive a federally backed mortgage.
The National Flood Insurance Program, NFIP, was created to help
alleviate this dilemma. However, the program is over $25 billion in
debt. While a substantial portion of that debt is directly due to
Hurricane Katrina, many elected officials and our constituents from
places less familiar with flooding believe the problem is insolvent
because of artificially low premiums. However, in my home State of
Florida, Mr. Speaker, where nearly 40 percent of all NFIP policies are
held, we have learned from devastating disasters, like Hurricane
Andrew, and have effective building codes and flood mitigation projects
in place. These policies have made our State, Florida, a net donor
State to the program, where we pay far more in premiums than we ever
receive back in payouts. Nevertheless, when the NFIP was last
reauthorized, it contained provisions that would raise rates on all
policyholders, sometimes by astronomical amounts.
And while the reauthorization program was vital because there had
been a series of devastating program lapses that made it impossible to
close on the purchase of a house, FEMA--the agency that administers the
NFIP--testified that the rate increases would be nominal to most
homeowners. Nominal? That, obviously, was far from the truth, and a
mandated affordability study that was supposed to precede any increase
was never completed.
These rate hikes are unwarranted. They are unfeasible. For that
reason, I have cosponsored different measures that would work to keep
flood insurance rates affordable for my constituents in south Florida.
I have also signed on to a letter to House leadership opposing flood
insurance hikes to encourage relief for the millions of homeowners, for
the millions of small businesses susceptible to steep rate increases
across the country. And I sent a letter to FEMA, asking this agency to
use its authority to keep flood insurance rates affordable. I also
voted to shield flood insurance policyholders from excessive rate hikes
in this year's fiscal year '14 Homeland Security Appropriations Act.
Mr. Speaker, the National Flood Insurance Program is vital for our
community; and without affordable rates, south Florida is in grave
danger. Halting rate increases will ensure that families and businesses
are able to thrive, rather than succumb to this inexcusable
bureaucratic storm.
I thank Mr. Marino of Pennsylvania for yielding and for his
leadership on this important issue.
Mr. MARINO. At this time, I yield to the gentleman from Louisiana,
Congressman Scalise.
Mr. SCALISE. I thank the gentleman from Pennsylvania for his
leadership and for yielding time.
Clearly, when you look at the problems with the National Flood
Insurance Program, what brought us to this point were a number of
things. One was that the program continued to lapse over and over
again. Multiple times, Congress had passed many patches and Band-Aids.
And ultimately, we would like to see a private marketplace where people
could go buy flood insurance. In fact, the Federal Government requires
that people in many areas purchase flood insurance, and yet the only
place you can go right now is NFIP. You can only go there to buy this,
which is a requirement for people purchasing a home in many places.
So if you look at how the implementation by FEMA is adversely
affecting millions of people across the country--specifically, some
examples we have seen in southeast Louisiana, in my district, point out
these glaring inequalities that have to be fixed by this Congress for
this program to work properly. In fact, many of the things that we all
want to see to get to an actuarially sound program will be undermined
if the FEMA implementation goes forward without the reforms that we
have been building a bipartisan coalition to implement.
And if you look at this--I will give you a couple of examples, Mr.
Speaker, in south Louisiana. In Terrebonne and Lafourche Parishes,
right on the front lines of the Gulf of Mexico, we are not talking
about people who have multimillion dollar vacation homes or anything
like that. These are hardworking taxpayers, people that work in the oil
field, helping produce American energy, people that are middle class
families that are being faced now with this rate shock. In many cases,
these are people who never flooded.
We have got a levee district that we went and brought some of the
FEMA officials out to just a few months ago, the Larose to Golden
Meadow Hurricane Protection System in Lafourche Parish. We went out
there. This is a levee protection system that was built by local people
with local money, not Federal money. This wasn't a levee protection
system that was built by the Corps of Engineers which, by the way, the
Corps' levees failed during Katrina. These folks down in Lafourche
Parish, they built their own levees, and they never flooded in
Hurricane Katrina. They never flooded in Hurricanes Rita or Isaac. In
fact, this levee protection system was so successful that many of these
people never even filed a flood insurance claim. And yet FEMA
completely ignores that that levee protection system exists. And some
of these people are going to be faced with $25,000-a-year flood
insurance premiums.
Now, some people might say that is an actuarially sound rate, but
that is going to be a death sentence to those families. Everybody
recognizes if you own a $200,000 house and then FEMA comes and says,
Okay, your annual premium for flood insurance is going to be $25,000 a
year, you are literally forcing that person to walk away from their
home. So you are going to lose the money they are already paying into
the system; and, again, in many cases, we are talking about people who
never even flooded, people who paid their own tax dollars--not Federal
money but local money to build a flood protection system that works.
It has worked for all of these storms, and yet FEMA is ignoring the
fact that that flood protection system even exists. And ironically,
FEMA certified the Corps flood protection systems that failed.
So these are the things that we are trying to address and fix, again,
working in a bipartisan way because ultimately we want to see a
competitive system. We want to see a system that is actuarially sound.
But anybody who thinks that these massive rate increases you would be
sending to people who played by the rules and never filed a claim in
many cases can pay a $15,000, $20,000 a year premium just for flood
insurance when it is much more than they are even paying for their own
home note, it is just fantasy. So we are going to continue working to
get this fixed, to put in place a system that is actuarially sound in a
way where people can continue to play by the rules and continue to keep
their homes and continue to be good, productive taxpayers and
contribute to our society like they are today. So that is what we are
going to continue working on.
Again, I thank the gentleman from Pennsylvania for his leadership.
Mr. MARINO. Thank you, Congressman Scalise.
[[Page H62]]
Mr. Speaker, you heard the devastating stories tonight about what the
American people are faced with. I have had over the past several weeks
numerous conversations with people involved in this legislation, people
involved in the agencies, people involved in committees. And to put it
quite bluntly, FEMA's methodology is extremely, extremely flawed.
And I asked--I knew the answer to this, but I wanted to hear it from
people with whom I spoke--So how many people is this affecting? Well,
it is only affecting not quite 3 million people in the United States.
{time} 1815
And I said, What do you mean, ``only?'' Well, we have indications
that FEMA knew that there would be a small percentage, a small number
of people who would get hit with extremely large bills. And I asked on
the telephone when I was talking to several of these people, Are you
one of the less than 3 million people? And there was dead silence. I
said, Well, you have answered the question. You are not. So obviously
this is just being taken for granted.
We have two places to go here. Do we want to create a myriad of ghost
towns across this country or do we want to continue to improve cities
and towns? I think the latter. I think we need to improve the quality
of life for American people. We work, Congress works for the American
people. I work for the people of the 10th Congressional District, and
we have a responsibility here. We bail out the banks and we bail out
the auto industry. And do you know something? My people in the 10th
Congressional District--and I'm sure across this country--they do not
want to be bailed out. They just want a level playing field.
So, in conclusion, I believe that we need to bring all the available
options to the table for a bipartisan solution to the flood insurance
rate increase. The colleagues that joined me this evening show how
important it is to a wide range of districts throughout the country. We
have to continue to be diligent in our work to assist these
constituents, and I look forward to participating, along with my
colleagues on the Committee on Financial Services, on crafting a
solution.
Remember, Mr. Speaker, this is a nationwide problem. And I keep
reiterating that many of the people in my district have a combined
income of $40,000 a year before taxes. They simply cannot afford
$10,000 and $15,000 bills of which they had no anticipation it was
coming.
I promise, and as my colleagues, I'm speaking for them, we will do
everything in our power to make this right and to make this fair and to
put our constituents on a level playing field.
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