FEMA does more than respond poorly to natural disasters, they now also can to retroactively assign your property to a flood plain.
This can cause you a load of problems since you will be required by your lender to purchase flood insurance. I have seen properties that were built 100% out of the flood plain and have been existing for 50 years without any flooding be allocated as in the flood plain and requiring insurance purchased by the lender. This insurance is actually more expensive then the total property insurance and in reality does very little to protect the homeowner. In fact, it hurts the homeowner significantly through higher insurance fees and a lower property valuation. A lose/lose for the owner and a win/win for the insurance companies. What a croc!
Here is what they've done recently: The Federal Emergency Management Agency (FEMA), as part of it’s administration of the National Flood insurance Program published flood hazard maps (called FIRMs) that show properties that are “subject to flooding and the risk associated with these flood hazards”. These maps have recently been updated which can cause some unexpected insurance and financing hurdles in the purchasing and selling of property.
In order to know if your property is affected, you can simply go to the FEMA website and search for your property. (http://msc.fema.gov/)
Can you get your property re-allocated out of the flood plain? Yes / Maybe / No!
There is a procedure to petition FEMA to remove your property from the flood plain. The Letter of Map Amendment (or LOMA) is the process for submitted mapping and survey information to FEMA that removes the property from the Special Flood Hazard Area (or SFHA). It is expensive and you must hire a professional survey company to do the work at your own expense. At minimum you will need elevation surveys of the property ($750 each in Mclennan County) and the total could run into the multi-thousands.
A better course to remove your property is to do the following. 1) Get your banker to pull a flood certificate for your individual property. It generally costs $25 and if you are lucky it will show that your property is outside of the flood plain and you can stick it in your file and forget about purchasing flood insurance.
2) Get an elevation survey that shows where the Lowest Adjacent Grade of the property is at. If this number is above the flood plain for the property then your banker can remove the requirement that you have flood insurance on the property.
3) Pay off the property completely and do not cover it with flood insurance
4) If you have to keep debt on the property then you can increase the deductible of the flood insurance to as high as is possible, $10K, $20K - the higher the better at reducing your annual premium.
5) Only purchase enough flood insurance to cover the banks loan.
FEMA and the insurance agencies have a bulls-eye on us consumers and they are not afraid to twist the screws harder. Call your congressman and let them know that this is hurting you financially and they should get involved to facilitate change with this insurance scandal.
You can call a Map Specialist in the FEMA Map Assistance Center toll free, at 1-877-FEMA-MAP (1-877-336-2627).
