Asserting that FEMA has not complied with its mandates to conduct affordability and peer reviews, state Attorney General Martha Coakley Wednesday urged Congress to delay implementation of a new bill that would dramatically increase flood insurance rates for many families and businesses from Cape Ann and other North Shore communities to Cape Cod and the south coast.
In a letter sent to U.S. House Speaker John Boehner, R-Ohio, and U.S. Senate Majority Leader Harry Reid, D-Nevada, Coakley is asking that the Biggert-Waters Flood Insurance Reform Act be delayed until the Federal Emergency Management Agency — FEMA — complies with a congressional mandate to undertake an affordability review and a peer review of the new flood zone maps.
By eliminating various federal subsidies in the National Flood Insurance Program and expanding flood zone maps, the bill — which took effect for some properties on Tuesday, Oct. 1, which marked the start of the new federal fiscal year — is expected to pose what Coakley called “harsh economic consequences” for many homeowners and small businesses in Massachusetts and elsewhere.
“Premature implementation of the Act threatens the housing recovery that Massachusetts and the nation are just starting to experience,” Coakley, a 2014 gubernatorial candidate, wrote in her letter. “We believe that dramatically increased flood insurance rates will tip the balance for many homeowners who weathered the economic downturn but are still feeling the residual effects of the housing crisis.”
Coakley’s letter came less than 48 hours after property owners from across Essex County met with FEMA representatives Monday in a workshop held in Lynn to express concern about the changes.
Some industry observers say the insurance premiums that homeowners pay will increase three to five times — or more — in coming months. The Lynn event was orchestrated by Congressman John Tierney, the Salem Democrat whose district includes all of Cape Ann and encompasses coastal communities from Lynn to Salisbury.
FEMA officials at the Lynn forum, attended by about 70, said that many homeowners are not fully aware of new regulations. They urged coastal homeowners to seek the aid of their insurance carriers.
Marian Spark, who heads the Greater Newburyport Association of Realtors, also said local homeowners should consult their insurance representatives.
“I don’t know that a lot of coastal homeowners are aware of the changes,” said Spark, who has attended real-estate seminars on the topic. “They don’t seem to get it yet.
“But there are big changes coming, and what we are seeing and hearing now about policy increases is just the tip of the iceberg.”
Flood insurance is mandatory for property owners with mortgages located in certain zones on Flood Insurance Rate Maps, Coakley noted Wednesday.
These homeowners and businesses have no choice, nor do the banks that service their mortgages, but to have flood insurance. Even properties in the new flood zones that do not have mortgages may still be affected, due to heightened building requirements or lower market demand for those properties, she added.
Staff Writer Dyke Hendrickson of the Daily News of Newburyport, sister paper to the Times, contributed to this story. He can be reached at firstname.lastname@example.org.