Flood of Advice About Flood Insurance

A couple of weeks ago some home sellers wrote in to complain that a new requirement for mandatory flood insurance was discouraging potential buyers. Their property, which had never had a water problem, showed up in a flood zone on FEMA’s new maps. That meant the next mortgage borrowers would be required to carry expensive flood insurance.

Readers responded with a flood of messages. Many wrote about successful challenges to FEMA’s new flood maps, a consultant offered her assistance, and if all else failed, some mentioned finding lower premiums.

• “I had the same problem and contacted the building department in my town. I discovered the extreme rear portion of my house was now in FEMA’s new floodplain map, which would have cost over $2,000 per year in insurance and certainly influenced the price of my house when I sold.

I called a local surveying company and asked for an elevation survey. They determined that our rear area was three inches too low. The surveyor suggested I raise the dirt six inches (to allow for settlement), re-seed, and then call him to re-survey.

A half load of dirt and lots of shoveling resulted in the rear area being above the flood line. After a new survey and submitting forms to the appropriate agency, my house was removed from the flood insurance requirement. (The surveyor filed the form for me.)

I now have written documentation that I am not in the flood plain and am not required to obtain insurance, nor would a new buyer — a simple solution. Total cost was less than $1,000. Hope this helps.” — L.L.

• “Many situations can be improved. Since 2010, I have worked with over 125 property owners about their flood insurance situation. One-third of the time I can find a way to remove the requirement for flood insurance and one-third of the time I can find a less expensive premium. I charge a consulting fee.” — D.K.

• “We are on a creek and have a pond on our land. We needed to get flood insurance when we refinanced because FEMA had changed the zones due to devastations with Sandy and Katrina. We did get affordable federal coverage, but this year that insurance premium has doubled. We decided to challenge the Federal flood maps by having a survey that did show our property was outside the chance of flooding. Then I completed a form called a LOMA, which I submitted to FEMA. We got a map amendment approved.

It cost $600 for the survey and the excellent company we used would have filed the amendment for an additional $200, but I was successful in doing it myself. FEMA was very timely (response in 90 days), which I found surprising in a federal agency.

We are now in a position if we sell the house to say it is not in a flood zone.” — C.M.

• “There is flood insurance available from others than FEMA. We found one that has great rates. They get it through Lloyds of London.” — askedith.com

• “Flood insurance started at $40 a month and had climbed to $200 a month. So I fought FEMA and won by hiring a surveyor who took care of the application process; it cost me about $700 and was so worth it. I also advised my neighbor to do it and he was successful, too.” — A.G.

It’s important to remember, of course, that the homeowners who wrote in were those with successful information to share. We aren’t hearing from those who paid for new surveys only to find that they really are in flood danger under the new guidelines.

Renting Back Foreclosed Home

Q: We lost our home to foreclosure (operation, lost job) — original cost of home, $150,000; sold at short sale for $49,000.

The buyer will let me stay and rent for half of what I was paying, but the bank is saying no, that the buyer must sign an agreement not to let me rent the house. Does the bank have that right to designate who rents the property? The bank would not let any family members purchase the property. Should this involve a lawyer? — D.H.

A: Before that short sale becomes final, the bank must agree to accept $49,000 and forgive the rest of your debt. They probably feel that allowing an ex-owner’s family to rent the property back would invite collusion and fraud. To answer your last question — yes, a lawyer can tell you if there’s any law about this. I’m pretty sure, though, that the lender is free to withhold approval if its requirements aren’t met.

Edith Lank will respond personally to any question sent to www.askedith.com, to edithlank@aol.com, or to 240 Hemingway Drive, Rochester NY 14620.