Flood insurance premium increase
Anyone who lived in Lowell in the spring of 2006 knows that the city can be devastated by flooding but that infrequently occurring natural phenomenon is about to have a big financial impact on my homeowners in the city. Mostly because of some powerful hurricanes the have struck the east coast from Florida to New York over the past few years, the federal government is redrawing its flood zone maps, expanding the areas that will now be considered in flood zones. At the same time, premiums for flood insurance are being adjusted upwards to cover the outlays made due to past storm damage and anticipated rising outlays in the future.
People with home mortgages insured by the federal government (which is most people with mortgages) who live within flood zones are required to have flood insurance the premium for which comes out of their monthly payment to their mortgage servicer. Home owners in these categories now face major increases in their premiums and, by extension, their monthly payments. This will effect many Lowell residents, not just those living in low lying areas of Centralville and Pawtucketville. Most of downtown is in a flood zone due to all the canals so all the owners of downtown condominiums now face substantial increases.
Since August of this year, the housing market has been lethargic and the cold winter months are unlikely to bring a home sales boom. Increasing the monthly mortgage payment of people whose hold on their houses might already be precarious will only add to the difficulties of the housing market.
Fortunately, some of our political leaders are aware of this and are seeking relief for homeowners. Just two weeks ago at the Greater Lowell Area Democrats annual brunch, Attorney General Martha Coakley, who I have worked with for the past few years on foreclosure prevention strategies, sought me out and inquired how much of a problem this will be for Lowell since she sees it as a major problem statewide. I said it was a big problem for Lowell and she assured me that her office was looking for ways to address it.
Just yesterday, Senator Elizabeth Warren raised concerns about the impact of these redrawn maps and flood insurance premium increases in a speech on the floor of the Senate which is shown below. Hopefully, some modifications will be made to this policy before it causes any further distress in the housing market.
2 Responses to Flood insurance premium increase
Lowell’s flood zones were changed by FEMA in 2010 as part of a similar effort to what is getting national attention in other parts of the country now, for similar reasons. Approximately 450 housing units were added to the approximately 2000 units that were previously located in flood zones. Fortunately a large number of these were located in the Downtown Lowell Historic District. There are currently some significant flood insurance savings available to owners of historic properties that were placed in flood zones after the construction of the buildings. We have mailed information about this program to all impacted parties in the historic district. If others are interested in it, they can contact Steve Stowell at the Lowell Historic Board (firstname.lastname@example.org). There is some concern that this benefit may also be threatened by current policy and regulatory discussions in Washington, DC, but hopefully it will be preserved.
So historic properties might get a break on their flood insurance but the rest of us are out of luck? Another example of the have and have not. I value Lowell’s historical properties but I also value my home. Since Pawtucketville has been flooded twice maybe it’s time for the downtown to have a turn.