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Community Corner

Ocean County Realtors Hold 'After Sandy' Info Session

Panel of experts address issues such as compliance, mitigation, insurance, financing, resale and rebuilding after Sandy.

Recognizing that real estate professionals are “on the front lines” when it comes to answering questions about homes and businesses after Sandy, the Ocean County Board of Realtors convened an information session this week in Toms River. 

Tom Wissel, of the Ocean County Board, invited representatives from FEMA and the SBA (Small Business Administration), as well as a real estate attorney, insurance professional and mortgage banker, to attend the first of two planned “After Sandy” panels.

“What I first learned, was a lesson on the Constitution because federal agencies need to be invited to sessions like this that deal with state and local issues," said Wissel. "They can not call for them on their own,” he added.

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In addition, federal agencies can also be restricted in what information they give out. “If you don’t ask the right questions, you won’t get the right answers,” he said.

There were plenty of right questions from the more than 60 agents and brokers that came from throughout the area to a satellite building of the Ocean County Library.

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In some cases however, the right questions did not always get specific answers, such as those about the recently released Advisory Base Flood Elevation (ABFE) maps.

In most municipalities the ABFEs recommend properties should be raised on average an additional two feet then the current maps call for. Many also had their zone rating upgraded from an A to a V.

An “A” zone indicates a property is in a potential flood area, while “V” means the property has additional hazards associated with storm waves. The zones can affect the height a property should be raised and additional construction precautions that need to be taken.

Matthew Buddie of FEMA said the ABFEs are advisory only and any current rebuilding and renovations could be based on the current Base Flood Elevations (BFEs) now in effect.

“The whole point of the ABFEs are to inform the recovery and rebuilding process,” said Buddie. “They will not effect current insurance rates,” he added.

New BFE maps are scheduled to be released this summer and then must be adopted or appealed by individual municipalities. The new maps are expected to be very similar to the ABFEs. However, some heights may be lower and zones downgraded, he added. 

Once fully adopted in 15-18 months, the maps will be a determining factor in setting flood insurance premiums, said Buddie.

Flood insurance rates are going up none the less, said Chris Toney also with FEMA. Under the Biggert-Waters Flood Insurance Reform Act of 2012 the national flood insurance program is no longer supporting a “subsidized rate,” said Toney.

As a result, premiums will rise 25 percent annually for the next five years in the A and V zones. For those living in an X zone, where the risk of flooding is low to moderate, rates will increase 13 percent. The increases will take effect upon indvidual policy renewals this year, said Toney.

Should a homeowner in an A or V  zone decide to restore their home at an elevation below its current BFE, they can expect their premiums to “skyrocket," said Toney.

Neither he nor Keith Taege, of the Van Dyk Insurance Group, could estimate a dollar figure on that additional increase. “It would have to be determined on a case by case basis,” said Taege. In some cases, homes could be “grandfathered” in on their rates for two years or more, but eventually they would go up, he added.

Toney also addressed questions about Increased Cost of Compliance (ICC) coverage that can be used to “elevate, demolish or move” a property in a flooded area. It could also be used to flood proof a commercial structure, said Toney.

ICC benefits are not a grant. They are component of all current flood insurance policies, he said. A home must have incurred “substantial damage” to qualify, said Toney.

"The determination of what constitutes substantial damage is not set by FEMA, but by municipalities through their building departments, said Toney. Local inspectors will issue the property owner a substantial damage letter that must accompany any ICC claim, added Toney.

There was some confusion over this matter as well, as every municipality has their own criteria. Toney said a good rule of thumb is if the damage is determined to more than 50 percent of the assessed value of the structure, it probably would qualify as substantial.

The 50 percent figure was for the structure only. The improvement portion of a local tax assesment could include items such as pools and decks and would not enter into the calculation, he added. 

Mark Jamison from SBA and Woody Keller, of Ocean First Bank, spoke about possible funding sources for those looking to rebuild their homes.

Keller said those needing to rebuild immediately that a home equity or construction loan could help them to get started while awaiting their insurance settlements.

Keller also said he is seeing a trend where he is prequalifying buyers looking to purchase homes still damaged that the owners are selling at a reduced price. They making up their loss by keeping their insurance settlement.

According to Jamison there are low interest loans available directly from the SBA for qualified borrowers on primary and second homes used as rental properties.

“We are primarialy not collateral lenders, there are no points, closing costs or pre-payment penalties," said Jamison. Also, title insurance is only needed should collateral be required, he added.

To find out if someone qualifies for an SBA loan they have to file an application with the agency by the Jan. 30 deadline, he said. “That SBA registration is a good thing to have in your tool belt,” he added.

The Jan. 30 deadline is also the one for all applications for FEMA benefits.

Finally, attorney Regina Gelzer told the audience of some tough options their clients may need to consider such as short sales or even bankruptcy.

She also said the state DEP has Blue Acres grants and loans for municipalities and counties to acquire lands in coastal areas that have been damaged by storms. Those interested should contact their local municipal government.

After the meeting, Wissel said most attendees felt a lot more comfortable with being able to answer most if not all potential questions their clients might have for them.

“We will be announcing a date for another session prior to the Jan. 30 filing deadline,” he said.

Note: Kysa George, Private Sector Specialist, said FEMA and SBA representatives are available to any organization or group looking to host a similar program. However, they must be “invited” to attend due to regulations governing federal agencies’ participation is state and local affairs.

For more information, George can be reached at Kysa.George@fema.dhs.gov.

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