Reforming federal flood insurance policies could help take pressure off of the housing market, local real estate agents say, and calls for change are rising.
Organizations including the Clark County Association of Realtors are rallying to adjust the National Flood Insurance Program because they say its methods are outdated, keeping premiums too high and slowing house sales, among other things.
“It definitely becomes a barrier to closing a deal on time. And sometimes, especially in this day and age, consumers can lose out on interest rates,” said Nathan Gorton, government affairs director for Washington Realtors.
Currently, homes with a federally-backed mortgage that are also considered vulnerable to rising waters have to enroll in the program. Homeowners pay premiums based on how prone to flooding their areas may be.
But detractors argue the program is faulty, charging the riskiest homes too little and the safest homes too much. Real estate groups say that if the federal government put private insurers “on equal footing,” risk could be distributed more evenly, insurance premiums could drop and ultimately the experience could be much smoother, they said.
David Gasser, president of the Clark County Association of Realtors, said the organization has been calling for change for more than a year.
“This program impacts thousands of homeowners in every corner of the country — including Clark County and our neighboring counties, making it a high priority for the CCAR,” he said. “We hope that Congress will pursue a longterm solution that adds stability and dependability to such an important aspect of homeownership for so many people.”
There are 1,671 homes in Clark County with flood insurance policies, according to the Federal Emergency Management Agency, which administers the program. Most policies are in unincorporated Clark County, Woodland and Vancouver.
Calls for changes have gotten louder recently as funding for the program is set to expire July 31.
The U.S. Senate has already packed a six-month extension of the program into its farm bill — an omnibus of agriculture policies and others — but the bill must be reconciled with a similar farm bill from the House.
Industry experts say they do expect to see a re-up in funding for the program, which was first installed in 1968, but they believe the time is coming to make changes.
“I’m always hopeful that Congress will understand that these short-term extensions don’t help anybody,” Gorton said. “Even with a short-term extension, which are great and we prefer that to no insurance, but even then transactions get caught up and undone. That hurts buyers and it hurts sellers. So we’re really hopeful.”