WASHINGTON, D.C.-- As part of its Fiscal Year 2000 budget, the Federal Emergency Management Agency (FEMA) is asking Congress for funding and the authority to assess mortgage transaction fees to modernize its flood-mapping technologies and the flood maps used to set flood insurance rates and assess a community's flood risk.
"Accurate, up-to-date flood maps are essential for communities and property owners to plan for and protect themselves from flooding. New construction can be designed to avoid or minimize the risk of flooding damage. Existing structures can be relocated, elevated, or retrofitted to reduce their risk," FEMA Director James Lee Witt said.
FEMA's budget proposal asks for a one-time appropriation of $5 million as well as the authority to assess a $15 user fee on all mortgage transactions. All monies collected from the fees will be paid into the Flood Map Modernization Fund, a separate account in the United States Treasury to be used exclusively for flood mapping.
Watersheds and flood hazards change due to development and other factors, and flood maps must be updated to remain accurate. FEMA's modernization plan calls for updating flood data for all communities with no or inadequate floodplain maps and converting all maps into a digital format. The digital maps would support automated applications, such as mortgage determinations, and allow for electronic distribution via the World Wide Web or CD-ROM.
Flood maps also allow those at risk to purchase flood insurance through the National Flood Insurance Program (NFIP). Such protection is not covered by standard homeowners' insurance. Accurate flood maps help set reasonable rates for flood insurance and ensure that those not at risk are not required to buy flood insurance.
Presently funding for the flood mapping program comes from two sources: 1) a portion of the $30 fee charged to each flood insurance policy sold and 2) fees charged for map products and services. Since 90 percent of the funding currently comes from policy fees, flood insurance policyholders bear the bulk of the financial burden for the program, although all property owners benefit.
Under current regulations, lending institutions must require flood insurance for flood-prone structures used as mortgage collateral when federal-sponsored funding may be involved. The lender and/or contractor typically assesses fees ranging from $15 to $35 on new mortgage applications to conduct a flood map review. As flood maps are converted into digital format and become more accessible, map determination fees are expected to decrease.
The modernization initiative also allows state, regional, and local governments to become directly involved in the flood mapping process. Under the Cooperating Technical Community Option, these government entities may be provided funding to complete some or all of the necessary activities for completing and/or modernizing their flood maps. FEMA will furnish guidelines and specifications for doing the work, provide technical assistance, and conduct periodic reviews throughout the process.
"Updating and modernizing our flood map inventory is an integral step in FEMA's efforts to help communities and individuals reduce their risk from natural disasters. It also allows us to administer the National Flood Insurance Program more fairly and efficiently. With the involvement of our state and local partners, we can provide easier accessibility to flood maps and accurate determinations of flooding risk that will guide safer development and bring benefits to all property owners, " Witt said.