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Mr. MERKLEY. I thank my colleague from Louisiana for her tireless efforts in this regard. We can tell from the commentaries that have just been put forward from the Senator from Massachusetts, the Senator from Mississippi, the Senator from North Dakota, of course our colleague from Louisiana, and now representing Oregon, that these are folks representing blue States and red States and all types of different terrains, and they have the common purpose of addressing the dysfunction of the Biggert-Waters bill that was passed.
Just to give a small feeling for this, the Hay family from Eagle Creek, OR, wanted to sell their home. They had a nice young couple with solid financials who wanted to buy it. It was all approved except for the insurance policy. When the couple found out the insurance policy would not be the $500 the current family has been paying but $5,000 a year, the deal fell apart because for every $1,000 you pay in flood insurance, the value of the home drops by $20,000. So not only is the couple who wanted this home unable to buy it because of the home's value dropping, but the family who owned the home, who had equity in the home, and who hoped to take these funds into retirement to be their nest egg, has lost that nest egg due to these outrageous additional costs, these dramatic increases.
So the point of sale is one particular problem that has a big impact on the real estate market, but we also have the situation of someone who has a policy lapse. Maybe an individual thinks their mortgage company is paying the policy, the mortgage company thinks the owner is paying it, and it defaults for a few days. When everyone finds out no one has paid the bill, suddenly that family might be going, in that situation, from $500 to $5,000. Or perhaps the mortgage company has never enforced the provision requiring flood insurance and now they have checked their records--and they are checking their records because they are now being charged a significant multithousand-dollar fine if they do not check their records--and they find you should have flood insurance under the law but you don't, so they contact you. Well, now you are facing this unsubsidized rate as a new policy.
So we have all of this, and then layered on top of that is the fact that across the Nation the flood zones are being remapped. So folks who were outside of the 100 years and have been outside and have had their homes for 15 years are suddenly getting notified that they are inside the flood zone and required by their mortgage company to get a policy.
They may say: But wait, I looked at the map, and only the corner of my property is in the flood zone and my house isn't.
Well, the mortgage company says: We are sorry. You have to get this, and you have to then prove you are not in the flood zone.
It may cost those homeowners thousands of dollars to get an elevation survey and be able to demonstrate they are outside the flood zone. The homeowner carries this burden of proof.
So this is a big challenge, and we should recognize how uncertain and what an art form it is to establish these 100-year zones because a company comes in and does a model, and they say: Well, a 100-year flood will look like this, and they will point out what tributary, what watershed that contributes to the confluence of creeks is going to end up flooding that particular town.
Based on their model, the flood zone might look as though it is in the eastern section of the town or the western section of the town, and so on and so forth, that uncertainty where just inches can change whether you are inside a 100-year or outside a 100-year. Some of these areas are very flat. A few inches water rise can cover many additional square miles, and this can have a huge impact on our business districts, because what business wants to reinvest in a business district when now they feel that any improvements they make are going to be in an area where no one else is going to want to buy their company because they are in a situation where they have unaffordable flood insurance.
This is why we have come together--Democrats and Republicans, States from the North, South, East, and West coming together--to say we must change this situation which is creating so much unfairness and economic damage. I am delighted, as the chair of the subcommittee, to be fully engaged in partnering this. A special thanks to my colleague, the Senator from Louisiana, who is doing such a fine job of championing this issue.
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