By ANDREW TAYLOR, Associated Press
FILE - In this July 30, 2013 file photo, Sen. Pat Toomey, R-Pa. speaks with reporters on Capitol Hill in Washington. Flood insurance rate increases for hundreds of thousands of people would be put off under a bill that’s steaming toward passage in the Senate, powered by coastal lawmakers telling horror stories of constituents at risk of losing their homes with the implementation of an overhaul of the federal flood insurance program passed less than two years ago. The Senate measure to delay some of the changes is likely to pass after votes on a host of amendments, including a plan by Toomey to phase in rate increases more slowly. It was unclear whether the measure will pass on Wednesday or Thursday. (AP Photo/J. Scott Applewhite, File)
WASHINGTON (AP) — Flood insurance rate increases for hundreds of thousands of people would be put off under a bill that's steaming toward passage in the Senate, powered by coastal lawmakers telling horror stories of constituents at risk of losing their homes with the implementation of an overhaul of the federal flood insurance program passed less than two years ago.
Its future remains uncertain in the House, where a much more modest plan is under development.
The legislation, which could pass the Senate as early as Wednesday, would delay for up to four years premium increases set to phase in next year on homeowners facing whopping premium increases under new flood maps. It also would allow homeowners with subsidized insurance policies to pass them on to people who buy their homes.
Other changes, including higher premiums for frequently flooded properties and on 1.7 million second homes, would remain in place. The White House is cool to the measure, but it has not threatened a veto.
A sweeping overhaul passed in 2012 was designed to make the federal flood insurance program more financially stable and bring insurance rates more in line with the real risk of flooding.
However, the new rates have caused panic among hundreds of thousands of people who face big premium jumps as flood maps are updated in coming years. The loss of subsidies when homes are sold has put a damper on the real estate market and threatened home values. Some homeowners are caught in a Catch-22: facing rates that, once phased in, they won't be able to afford. But the alternative of selling their homes is difficult because the new owner would have to pay the higher rates immediately.
The Senate measure to delay some of the changes is likely to pass after votes on a host of amendments, including a plan by Sen. Pat Toomey, R-Pa., to phase in rate increases more slowly. It was unclear whether the measure will pass on Wednesday or Thursday.
Opponents of the legislation says it essentially unravels reforms passed less than two years ago under the leadership of former Rep. Judy Biggert, R-Ill., and Rep. Maxine Waters, D-Calif., that were design to make the much-criticized flood insurance program actuarially sound. Critics of the program say it encouraged building in risky areas, has essentially put taxpayers on the hook for $24 billion in losses, and requires homeowners in less risky areas to subsidize below-market rates for others.
Backers of the bill say the implementation of the Biggert-Waters law has played out in unintended ways, especially for people who face massive, unaffordable premium hikes — phased in over five years — under new flood maps, some of which are incorrect or have failed to account for local flood mitigation efforts.
"I'm all for helping people who are really pinched in this deal," said Sen. Tom Coburn. "But this is a wide-swath, help everybody and it really defeats the Whole purpose of Biggert-Waters in the first place."
Congress has already stepped in to delay premium increases scheduled for later this year with a provision tucked into this month's government-wide funding bill. That provision gives relief to those facing increases because of new maps but doesn't allow people to pass below-market rates on to people who buy their homes.
Its future in the House was uncertain at best, where Speaker John Boehner, R-Ohio, and Financial Services Chairman Jeb Hensarling, R-Texas, oppose the Senate bill but are considering a far more modest measure that would leave more of the 2012 overhaul in place. Democratic Rep. Cedric Richmond, who represents New Orleans, said there's sweeping support in the House behind the Senate measure if GOP leaders would allow a vote. He warned of the potential for another mortgage crisis.