In March of
this year President Obama signed into law the Federal Homeowner Flood Insurance
Affordability Act of 2014 which amends previous law – now homeowners in flood
plains and districts, like Palo Alto, East Palo Alto, and Menlo Park will be
provided relief.
Due to
ever-increasing flood insurance premiums many Palo Alto homeowners took
measures to help reduce the premiums they were paying for coverage pursuant to
the Biggert-Waters Flood Insurance Reform Act of 2012. The measures included the procedure of
applying for a Letter of Map Amendment (LOMA) which exempted properties within
flood zones from mandatory flood insurance if the LOMA could show that the
individual property was at a higher elevation then the most at-risk
properties. The new law repeals the
removal of the grandfather clauses which previously existed, thus allowing the
property owners relief from the Biggert-Waters provisions, which means lower
insurance premiums. Even though Congress
hasn’t been fully engaged yet Palo Alto homeowners should be happy as their
premiums will be lower.
All of Palo
Alto is in a flood-zone, but only certain portions along San Francisquito Creek
are designated “high-risk” Special Flood Hazard Areas (SFHA). In fact most of Palo Alto is located within a
designated area that doesn’t require flood insurance, but the burden is on the
property owner to prove that to their lender.
Thus, to prevent the unnecessary insurance a property owner must hire a
surveyor to provide an “elevation certificate” for a fee (usually between $500
and $2,000).
Federal
regulations require that loans for properties in SFHAs must have flood
insurance if the property is collateral for a loan or is free of
encumbrances. Clever Palo Alto residents
in this predicament have procured surveyors to get LOMAs. Importantly, not all people in this situation
know about LOMAs or this option. With
the implementation of the Homeowner Flood Insurance Affordability Act of 2014
properties can retain their subsidized premiums (grandfather clause) instead of
being forced into premium increases when existing policies terminate or the
properties are sold. In a bonus section
of the law FEMA is required to refund policy holders who have overpaid for
premiums under the old law.
A flood
insurance presentation will be on display on Wednesday, April 23 at 730P at the
Palo Alto City Council Chambers. The
meeting will also be broadcast on cablecast Channel 26.
SHELLY ROBERSON
Alain Pinel Realtors
23+ Years’ Experience, 600+ Closed
Transactions
1-650-464-3797
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