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Flood Insurance Payment Changes
CEDAR RAPIDS, IA (CBS2/FOX28) President Obama is expected to sign a bill into law next week that could drastically affect how much Iowans pay for flood insurance.
When homeowners get payments from F.E.M.A., it comes from the National Flood Insurance Program. But that program operates at a 24 Billion dollar shortfall. The legislation that just passed through Congress this week is an attempt to help that program without hurting Iowans too much.
It all started in 2012 with Congress Biggert-Waters Flood Insurance Reform Act. The law cut subsidies for flood insurance, re-mapped certain floodplains and resulted in higher payments for individual homeowners.
"After [Hurricanes] Sandy and Katrina, the expenditures on disaster relief were much more than anybody I think ever anticipated, said Cedar Rapids Assistant Manager of Building Services and Certified Floodplain Manger Ray Nees.
The changes meant higher payments for people like Larry Peyton, who rebuilt his Cedar Rapids home the floods in 2008. For some people, the difference was thousands of dollars.
"It's just something else piled on top of everything that goes on now, said Peyton.
"I think the increases in flood insurance rates were much more substantial than anybody thought they would be, said Nees.
Insurance companies say the increases make it extremely difficult to sell a home and that the bill fixed a national problem at the expense of people like Larry and his neighbors.
But the legislation in front of President Obama right now would likely help. It would cut back on the harshest changes from 2012, allowing the national program to get out of the red while helping homeowners stay financially stable too. Ray says its because of grassroots efforts that Ray says made it clear that, we understand its got to be solvent but it doesnt have to be solvent right away. We can phase this in a little bit and try to soften the blow and I think thats what they did.
Experts say the alternative is to keep the program the way it is now. The problem is that if the program operates at a deficit, it will be up to tax payers to cover it, not just those with flood insurance policies.