Hurricane Harvey inundated the Houston area with several feet of rain. Lawmakers are looking to rehabilitate the National Flood Insurance Program. (Tom Fox/Dallas Morning News/TNS)

Hurricane Harvey inundated the Houston area with several feet of rain. Lawmakers are looking to rehabilitate the National Flood Insurance Program. (Tom Fox/Dallas Morning News/TNS)

Homes with multiple flood claims at risk under proposed overhaul of federal program

WASHINGTON — As lawmakers look to rehabilitate the deep-in-debt National Flood Insurance Program, they’re turning their focus to one of its most complicated problems: multiple loss properties.

These are the homes and businesses that repeatedly flood, leading the owners to file multiple claims. And while they’re just 2 percent of the program’s 5 million policies, they account for roughly 30 percent of flood claims — about $17 billion — paid over the program’s history, according to the Federal Emergency Management Agency.

The program could receive a boost as the House approved a disaster relief bill that would forgive $16 billion of its debt, a decision that now heads to the Senate. But both the White House and Rep. Jeb Hensarling, chairman of the House Financial Services Committee, said changes are needed to bring the program closer to solvency.

Hensarling wants to step up buyout and mitigation efforts, while he and the White House both support measures that would make it easier to deny or drop coverage for some of the most flood-prone properties.

Most say addressing multiple loss properties is common sense, but that could be nerve-wracking for homeowners like Michael Bolton, whose northwest Houston home has repeatedly flooded over the past decade.

Bolton lived there for 17 years before it first took on significant water during Hurricane Ike in 2008. He had flood insurance, though he wasn’t required to carry it, unlike those who have federally backed mortgages and live in high-risk flood zones.

His house has flooded three more times since Ike, with payouts from the federal program totaling more than $205,000 — not including Hurricane Harvey damage. According to his most recent appraisal, his property is worth $206,000, down from $230,000, he said.

Now, as he watches neighbors cut their losses and move after Harvey caused the latest round of flooding, Bolton is considering his options.

“If I had no equity, I’d walk away,” he said. “I’m too old for this.”

One of the measures Hensarling’s committee passed this year, as part of an upcoming five-year reauthorization of the program, would phase out existing discounts for some multiple loss properties. It would also increase the federal assistance for mitigation and buyouts, something a committee spokesman said could help people like Bolton.

A proposal by Rep. Sean Duffy would also create a category of “extreme repetitive loss” for structures that have at least two separate flooding claims and payouts exceeding 150 percent of the maximum coverage value.
The legislation would give the program authority to deny continued coverage to those policyholders, if they refuse a mitigation offer.

The White House wants to go even further, allowing the flood program to drop coverage for extreme repetitive loss properties if “it is not in the best interest of the program’s financial solvency to renew coverage or make an offer of mitigation,” Office of Management and Budget Director Mick Mulvaney wrote to congressional leaders this month.

The flood program’s debt ballooned after Hurricanes Katrina and Sandy, and it reached its $30.4 billion borrowing limit soon after Harvey and Irma.
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