```

[House Report 111-495]
[From the U.S. Government Publishing Office]

111th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     111-495

======================================================================

 
             FLOOD INSURANCE REFORM PRIORITIES ACT OF 2010

                                _______
                                

  May 26, 2010.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Frank of Massachusetts, from the Committee on Financial Services, 
                        submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 5114]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Financial Services, to whom was referred the 
bill (H.R. 5114) to extend the authorization for the national 
flood insurance program, to identify priorities essential to 
reform and ongoing stable functioning of the program, and for 
other purposes, having considered the same, report favorably 
thereon with an amendment and recommend that the bill as 
amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................    13
Background and Need for Legislation..............................    14
Hearings.........................................................    17
Committee Consideration..........................................    17
Committee Votes..................................................    17
Committee Oversight Findings.....................................    19
Performance Goals and Objectives.................................    19
New Budget Authority, Entitlement Authority, and Tax Expenditures    19
Committee Cost Estimate..........................................    19
Congressional Budget Office Estimate.............................    19
Federal Mandates Statement.......................................    28
Advisory Committee Statement.....................................    28
Constitutional Authority Statement...............................    28
Applicability to Legislative Branch..............................    28
Earmark Identification...........................................    29
Section-by-Section Analysis of the Legislation...................    29
Changes in Existing Law Made by the Bill, as Reported............    33
Additional Views.................................................    49

                               Amendment

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Flood Insurance 
Reform Priorities Act of 2010''.
  (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Extension of national flood insurance program.
Sec. 4. Maximum coverage limits.
Sec. 5. Phase-in of actuarial rates for nonresidential properties, 
certain pre-FIRM properties, and non-primary residences.
Sec. 6. 5-year delay in effective date of mandatory purchase 
requirement for new flood hazard areas.
Sec. 7. 5-year phase-in of flood insurance rates for newly mapped 
areas.
Sec. 8. Increase in annual limitation on premium increases.
Sec. 9. Consideration of construction, reconstruction, and improvement 
of flood protection systems in determination of flood insurance rates.
Sec. 10. Treatment of certain flood protection projects.
Sec. 11. Notification to homeowners regarding mandatory purchase 
requirement applicability and rate phase-ins.
Sec. 12. Coverage for additional living expenses and business 
interruption.
Sec. 13. Exception to waiting period for effective date of policies.
Sec. 14. Minimum deductibles for claims.
Sec. 15. Payment of premiums in installments for low-income 
policyholders.
Sec. 16. Enforcement.
Sec. 17. Notification to tenants of availability of contents insurance.
Sec. 18. Flood insurance outreach.
Sec. 19. Notice of availability of flood insurance and escrow in RESPA 
good faith estimate.
Sec. 20. Authorization of additional FEMA staff.
Sec. 21. Plan to verify maintenance of flood insurance on Mississippi 
and Louisiana properties receiving emergency supplemental funds.
Sec. 22. Flood insurance advocate.
Sec. 23. Eligibility of property demolition and rebuilding under flood 
mitigation assistance program.
Sec. 24. Study regarding mandatory purchase requirement for non-
federally related loans.
Sec. 25. Study of methods to increase flood insurance program 
participation by low-income families.
Sec. 26. Report on inclusion of building codes in floodplain management 
criteria.
Sec. 27. Study on repaying flood insurance debt.
Sec. 28. Study regarding impact of rate increases on pre-FIRM 
properties.
Sec. 29. Study of effects of Act.
Sec. 30. Rulemaking.

SEC. 2. FINDINGS AND PURPOSES.

  (a) Findings.--The Congress finds that--
          (1) since the enactment of National Flood Insurance Act of 
        1968, the national flood insurance program has been the primary 
        source of reliable, reasonably priced, flood insurance coverage 
        for millions of American homes and businesses;
          (2) today over 5,500,000 homes and businesses in the United 
        States rely on the national flood insurance program to provide 
        a degree of financial security;
          (3) although participation in the national flood insurance 
        program has, in the past, largely been limited to properties 
        required to participate in the program because of the program's 
        mandatory purchase requirement for properties in special flood 
        hazard areas with loans from federally regulated lenders, 
        recent annual and extraordinary flooding has resulted in the 
        program enjoying its highest voluntary participation since the 
        establishment of the mandatory flood insurance purchase 
        requirement;
          (4) several years of below-average flood claims losses and 
        increased voluntary participation in the national flood 
        insurance program have allowed the program to fully service the 
        debt incurred following Hurricanes Katrina and Rita and allowed 
        the program to pay $598,000,000 of the principal of that 
        outstanding debt;
          (5) though significant reforms are needed to further improve 
        the financial outlook of the national flood insurance program, 
        long-term and reliable authorization of the program is an 
        essential element to stabilizing the already fragile United 
        States housing market;
          (6) increased flooding in areas outside designated special 
        flood hazard areas prompted the Executive and the Congress in 
        2002 to begin calling for the national flood insurance program 
        to develop and disseminate revised, updated flood insurance 
        rate maps that reflect the real risk of flooding for properties 
        not previously identified as being located within a special 
        flood hazard area;
          (7) dissemination of accurate, up-to-date, flood-risk 
        information remains a primary goal of the national flood 
        insurance program and such information should be disseminated 
        as soon as such information is collected and available;
          (8) communities should be encouraged to make their residents 
        aware of updated flood-risk data while communities are 
        assessing and incorporating updated flood-risk data into long-
        term community planning;
          (9) the maximum coverage limits for flood insurance policies 
        should be increased to reflect inflation and the increased cost 
        of housing; and
          (10) phasing out flood insurance premium subsidies currently 
        extended to vacation homes, second homes, and commercial 
        properties would result in significant average annual savings 
        to the national flood insurance program.
  (b) Purposes.--The purposes of this Act are--
          (1) to identify priorities essential to the reform and 
        ongoing stable functioning of the national flood insurance 
        program;
          (2) to increase incentives for homeowners and communities to 
        participate in the national flood insurance program and to 
        improve oversight to ensure better accountability of the 
        national flood insurance program and the Federal Emergency 
        Management Agency; and
          (3) to increase awareness of homeowners of flood risks and 
        improve the information regarding such risks provided to 
        homeowners.

SEC. 3. EXTENSION OF NATIONAL FLOOD INSURANCE PROGRAM.

  (a) Program Extension.--Section 1319 of the National Flood Insurance 
Act of 1968 (42 U.S.C. 4026) is amended by striking ``September 30, 
2008'' and inserting ``September 30, 2015''.
  (b) Financing.--Section 1309(a) of such Act (42 U.S.C. 4016(a)) is 
amended by striking ``September 30, 2008'' and inserting ``September 
30, 2015''.
  (c) Extension of Pilot Program for Mitigation of Severe Repetitive 
Loss Properties.--Section 1361A of the National Flood Insurance Act of 
1968 (42 U.S.C. 4102a) is amended--
          (1) in subsection (k)(1), by striking ``2005, 2006, 2007, 
        2008, and 2009'' and inserting ``2011, 2012, 2013, 2014, and 
        2015''; and
          (2) by striking subsection (l).

SEC. 4. MAXIMUM COVERAGE LIMITS.

  Subsection (b) of section 1306 of the National Flood Insurance Act of 
1968 (42 U.S.C. 4013(b)) is amended--
          (1) in paragraph (2), by striking ``$250,000'' and inserting 
        ``$335,000'';
          (2) in paragraph (3), by striking ``$100,000'' and inserting 
        ``$135,000''; and
          (3) in paragraph (4)--
                  (A) by striking ``$500,000'' each place such term 
                appears and inserting ``$670,000''; and
                  (B) by inserting before ``; and'' the following: ``; 
                except that, in the case of any nonresidential property 
                that is a structure containing more than one dwelling 
                unit that is made available for occupancy by rental 
                (notwithstanding the provisions applicable to the 
                determination of the risk premium rate for such 
                property), additional flood insurance in excess of such 
                limits shall be made available to every insured upon 
                renewal and every applicant for insurance so as to 
                enable any such insured or applicant to receive 
                coverage up to a total amount that is equal to the 
                product of the total number of such rental dwelling 
                units in such property and the maximum coverage limit 
                per dwelling unit specified in paragraph (2); except 
                that in the case of any such multi-unit, nonresidential 
                rental property that is a pre-FIRM structure (as such 
                term is defined in section 578(b) of the National Flood 
                Insurance Reform Act of 1994 (42 U.S.C. 4014 note)), 
                the risk premium rate for the first $500,000 of 
                coverage shall be determined in accordance with section 
                1307(a)(2) and the risk premium rate for any coverage 
                in excess of such amount shall be determined in 
                accordance with section 1307(a)(1)''.

SEC. 5. PHASE-IN OF ACTUARIAL RATES FOR NONRESIDENTIAL PROPERTIES, 
                    CERTAIN PRE-FIRM PROPERTIES, AND NON-PRIMARY 
                    RESIDENCES.

  (a) In General.--Section 1308(c) of the National Flood Insurance Act 
of 1968 (42 U.S.C. 4015(c)) is amended--
          (1) by redesignating paragraph (2) as paragraph (5); and
          (2) by inserting after paragraph (1) the following new 
        paragraphs:
          ``(2) Nonresidential properties.--Any nonresidential 
        property, which term shall not include any multifamily rental 
        property that consists of four or more dwelling units.
          ``(3) Non-primary residences.--Any residential property that 
        is not the primary residence of any individual, including the 
        owner of the property or any other individual who resides in 
        the property as a tenant.
          ``(4) Recently purchased pre-firm single-family properties 
        used as principal residencies.--Any single family property 
        that--
                  ``(A) has been constructed or substantially improved 
                and for which such construction or improvement was 
                started, as determined by the Director, before December 
                31, 1974, or before the effective date of the initial 
                rate map published by the Director under paragraph (2) 
                of section 1360 for the area in which such property is 
                located, whichever is later; and
                  ``(B) is purchased after the date of enactment of the 
                Flood Insurance Reform Priorities Act of 2010.''.
  (b) Technical Amendments.--Section 1308 of the National Flood 
Insurance Act of 1968 (42 U.S.C. 4015) is amended--
          (1) in subsection (c)--
                  (A) in the matter preceding paragraph (1), by 
                striking ``the limitations provided under paragraphs 
                (1) and (2)'' and inserting ``subsection (e)''; and
                  (B) in paragraph (1), by striking ``, except'' and 
                all that follows through ``subsection (e)''; and
          (2) in subsection (e), by striking ``paragraph (2) or (3)'' 
        and inserting ``paragraph (5)''.
  (c) Effective Date and Transition.--
          (1) Effective date.--The amendments made by subsections (a) 
        and (b) shall apply beginning upon the expiration of the 3-year 
        period that begins on the date of the enactment of this Act, 
        except as provided in paragraph (2) of this subsection.
          (2) Transition for properties covered by flood insurance upon 
        effective date.--
                  (A) Increase of rates over time.--In the case of any 
                property described in paragraph (2), (3), or (4) of 
                section 1308(c) of the National Flood Insurance Act of 
                1968, as amended by subsection (a) of this section, 
                that, as of the effective date under paragraph (1) of 
                this subsection, is covered under a policy for flood 
                insurance made available under the national flood 
                insurance program for which the chargeable premium 
                rates are less than the applicable estimated risk 
                premium rate under section 1307(a)(1) for the area in 
                which the property is located, the Director of the 
                Federal Emergency Management Agency shall increase the 
                chargeable premium rates for such property over time to 
                such applicable estimated risk premium rate under 
                section 1307(a)(1).
                  (B) Annual increase.--Such increase shall be made by 
                increasing the chargeable premium rates for the 
                property (after application of any increase in the 
                premium rates otherwise applicable to such property), 
                once during the 12-month period that begins upon the 
                effective date under paragraph (1) of this subsection 
                and once every 12 months thereafter until such increase 
                is accomplished, by 20 percent (or such lesser amount 
                as may be necessary so that the chargeable rate does 
                not exceed such applicable estimated risk premium rate 
                or to comply with subparagraph (C)).
                  (C) Properties subject to phase-in and annual 
                increases.--In the case of any pre-FIRM property (as 
                such term is defined in section 578(b) of the National 
                Flood Insurance Reform Act of 1974), the aggregate 
                increase, during any 12-month period, in the chargeable 
                premium rate for the property that is attributable to 
                this paragraph or to an increase described in section 
                1308(e) of the National Flood Insurance Act of 1968 may 
                not exceed 20 percent.
                  (D) Full actuarial rates.--The provisions of 
                paragraphs (2), (3), and (4) of such section 1308(c) 
                shall apply to such a property upon the accomplishment 
                of the increase under this paragraph and thereafter.

SEC. 6. 5-YEAR DELAY IN EFFECTIVE DATE OF MANDATORY PURCHASE 
                    REQUIREMENT FOR NEW FLOOD HAZARD AREAS.

  (a) In General.--Section 102 of the Flood Disaster Protection Act of 
1973 (42 U.S.C. 4012a) is amended by adding at the end the following 
new subsection:
  ``(i) Delayed Effective Date of Mandatory Purchase Requirement for 
New Flood Hazard Areas.--
          ``(1) In general.--In the case of any area that was not 
        previously designated as an area having special flood hazards 
        and that, pursuant to any issuance, revision, updating, or 
        other change in flood insurance maps that takes effect on or 
        after September 1, 2008, becomes designated as an area having 
        special flood hazards, if each State and local government 
        having jurisdiction over any portion of the geographic area has 
        complied with paragraph (2), such designation shall not take 
        effect for purposes of subsection (a), (b), or (e) of this 
        section, or section 202(a) of this Act, until the expiration of 
        the 5-year period beginning upon the date that such maps, as 
        issued, revised, update, or otherwise changed, become 
        effective.
          ``(2) Notice requirements.--A State or local government shall 
        be considered to have complied with this paragraph with respect 
        to any geographic area described in paragraph (1) only if the 
        State or local government has, before the effective date of the 
        issued, revised, updated, or changed maps, and in accordance 
        with such standards as shall be established by the Director--
                  ``(A) developed an evacuation plan to be implemented 
                in the event of flooding in such portion of the 
                geographic area; and
                  ``(B) developed and implemented an outreach and 
                communication plan to advise occupants in such portion 
                of the geographic area of potential flood risks, the 
                opportunity to purchase flood insurance, and the 
                consequences of failure to purchase flood insurance.
          ``(3) Rule of construction.--Nothing in paragraph (1) may be 
        construed to affect the applicability of a designation of any 
        area as an area having special flood hazards for purposes of 
        the availability of flood insurance coverage, criteria for land 
        management and use, notification of flood hazards, eligibility 
        for mitigation assistance, or any other purpose or provision 
        not specifically referred to in paragraph (1).''.
  (b) Conforming Amendment.--The second sentence of subsection (h) of 
section 1360 of the National Flood Insurance Act of 1968 (42 U.S.C. 
4101(h)) is amended by striking ``Such'' and inserting ``Except for 
notice regarding a change described in section 102(i)(1) of the Flood 
Disaster Protection Act of 1973 (42 U.S.C. 4012a(i)(1)), such''.
  (c) No Refunds.--Nothing in this section or the amendments made by 
this section may be construed to authorize or require any payment or 
refund for flood insurance coverage purchased for any property that 
covered any period during which such coverage is not required for the 
property pursuant to the applicability of the amendment made by 
subsection (a).

SEC. 7. 5-YEAR PHASE-IN OF FLOOD INSURANCE RATES FOR NEWLY MAPPED 
                    AREAS.

  Section 1308 of the National Flood Insurance Act of 1968 (42 U.S.C. 
4015), as amended by the preceding provisions of this Act, is further 
amended--
          (1) in subsection (a), in the matter preceding paragraph (1), 
        by inserting ``or notice'' after ``prescribe by regulation'';
          (2) in subsection (c), by inserting ``and subsection (g)'' 
        before the first comma; and
          (3) by adding at the end the following new subsection:
  ``(g) 5-Year Phase-In of Flood Insurance Rates for Newly Mapped 
Areas.--Notwithstanding any other provision of law relating to 
chargeable risk premium rates for flood insurance coverage under this 
title, in the case of any area that was not previously designated as an 
area having special flood hazards and that, pursuant to any issuance, 
revision, updating, or other change in flood insurance maps, becomes 
designated as such an area, during the 5-year period that begins upon 
the expiration of the period referred to in section 102(i)(1) of the 
Flood Disaster Protection Act of 1973 with respect to such area, the 
chargeable premium rate for flood insurance under this title with 
respect to any property that is located within such area shall be--
          ``(1) for the first year of such 5-year period, 20 percent of 
        the chargeable risk premium rate otherwise applicable under 
        this title to the property;
          ``(2) for the second year of such 5-year period, 40 percent 
        of the chargeable risk premium rate otherwise applicable under 
        this title to the property;
          ``(3) for the third year of such 5-year period, 60 percent of 
        the chargeable risk premium rate otherwise applicable under 
        this title to the property;
          ``(4) for the fourth year of such 5-year period, 80 percent 
        of the chargeable risk premium rate otherwise applicable under 
        this title to the property; and
          ``(5) for the fifth year of such 5-year period, 100 percent 
        of the chargeable risk premium rate otherwise applicable under 
        this title to the property.''.

SEC. 8. INCREASE IN ANNUAL LIMITATION ON PREMIUM INCREASES.

  Section 1308(e) of the National Flood Insurance Act of 1968 (42 
U.S.C. 4015(e)) is amended by striking ``10 percent'' and inserting 
``20 percent''.

SEC. 9. CONSIDERATION OF CONSTRUCTION, RECONSTRUCTION, AND IMPROVEMENT 
                    OF FLOOD PROTECTION SYSTEMS IN DETERMINATION OF 
                    FLOOD INSURANCE RATES.

  (a) In General.--Section 1307 of the National Flood Insurance Act of 
1968 (42 U.S.C. 4014) is amended--
          (1) in subsection (e)--
                  (A) in the first sentence, by striking ``construction 
                of a flood protection system'' and inserting 
                ``construction, reconstruction, or improvement of a 
                flood protection system (without respect to the level 
                of Federal investment or participation)''; and
                  (B) in the second sentence--
                          (i) by striking ``construction of a flood 
                        protection system'' and inserting 
                        ``construction, reconstruction, or improvement 
                        of a flood protection system''; and
                          (ii) by inserting ``based on the present 
                        value of the completed system'' after ``has 
                        been expended''; and
          (2) in subsection (f)--
                  (A) in the first sentence in the matter preceding 
                paragraph (1), by inserting ``(without respect to the 
                level of Federal investment or participation)'' before 
                the period at the end;
                  (B) in the third sentence in the matter preceding 
                paragraph (1), by inserting ``, whether coastal or 
                riverine,'' after ``special flood hazard''; and
                  (C) in paragraph (1), by striking ``a Federal agency 
                in consultation with the local project sponsor'' and 
                inserting ``the entity or entities that own, operate, 
                maintain, or repair such system''.
  (b) Regulations.--Not later than 90 days after the date of the 
enactment of this Act, the Administrator of the Federal Emergency 
Management Agency shall promulgate regulations to carry out the 
amendments made by subsection (a). Section 5 may not be construed to 
annul, alter, affect, authorize any waiver of, or establish any 
exception to, the requirement under the preceding sentence.
  (c) Implementation.--The Administrator of the Federal Emergency 
Management Agency shall implement this section and the amendments made 
by this section in a manner that will not materially weaken the 
financial position of the national flood insurance program or increase 
the risk of financial liability to Federal taxpayers.

SEC. 10. TREATMENT OF CERTAIN FLOOD PROTECTION PROJECTS.

  Section 1308 of the National Flood Insurance Act of 1968 (42 U.S.C. 
4015), as amended by the preceding provisions of this Act, is further 
amended by adding at the end the following new subsection:
  ``(h) Treatment of Certain Flood Protection Projects.--
          ``(1) Inapplicability of mandatory purchase requirement; 
        premium rates.--Notwithstanding any other provision of law, 
        upon full completion, as designed, of a flood protection system 
        that was intended to provide flood protection with respect to a 
        covered area, such covered area--
                  ``(A) shall not be considered to be an area having 
                special flood hazards for purposes of this Act or 
                subsections (a), (b), or (e) of section 102, or section 
                202(a) of the Flood Disaster Protection Act of 1973; 
                and
                  ``(B) shall be eligible for flood insurance under 
                this Act, if and to the extent that such area is 
                eligible for such insurance under the other provisions 
                of this Act, at premium rates not exceeding those that 
                would be applicable under this section if the flood 
                protection system referred to in paragraph (2) for such 
                area had been completed and accredited as providing 
                protection from floods at the level that the system was 
                designed to provide (before construction, 
                reconstruction, or improvement of the system, as 
                applicable, began).
        The flood insurance rate maps shall indicate, for each covered 
        area, the status of the area under subparagraphs (A) and (B).
          ``(2) Covered area.--For purposes of this subsection, a 
        covered area is an area that was intended to be protected by a 
        flood protection system--
                  ``(A)(i) for which, as of April 15, 2010--
                          ``(I) construction, reconstruction, or 
                        improvement has not been completed;
                          ``(II) adequate progress, within the meaning 
                        of section 1307(e), has been made on such 
                        construction, reconstruction, or improvement; 
                        and
                          ``(III) is in an area having special flood 
                        hazards; or
                  ``(ii) for which, as of such date--
                          ``(I) construction, reconstruction, or 
                        improvement has been completed;
                          ``(II) a determination regarding 
                        accreditation has not been made; and
                          ``(III) is in an area having special flood 
                        hazards;
                  ``(B) that was designed to provide protection for at 
                least the 100-year frequency flood; and
                  ``(C) that has been determined, pursuant to waterflow 
                data or other scientific information of a Federal 
                agency obtained after, or that has changed since, 
                commencement of construction, reconstruction, or 
                improvement, will not provide protection from floods at 
                the level referred to in subparagraph (B).''.

SEC. 11. NOTIFICATION TO HOMEOWNERS REGARDING MANDATORY PURCHASE 
                    REQUIREMENT APPLICABILITY AND RATE PHASE-INS.

  Section 201 of the Flood Disaster Protection Act of 1973 (42 U.S.C. 
4105) is amended by adding at the end the following new subsection:
  ``(f) Annual Notification.--The Director, in consultation with 
affected communities, shall establish and carry out a plan to notify 
residents of areas having special flood hazards, on an annual basis--
          ``(1) that they reside in such an area;
          ``(2) of the geographical boundaries of such area;
          ``(3) of whether section 1308(h) of the National Flood 
        Insurance Act of 1968 applies to properties within such area; 
        and
          ``(4) of the provisions of section 102 requiring purchase of 
        flood insurance coverage for properties located in such an 
        area, including the date on which such provisions apply with 
        respect to such area, taking into consideration section 102(i); 
        and
          ``(5) of a general estimate of what similar homeowners in 
        similar areas typically pay for flood insurance coverage, 
        taking into consideration section 1308(g) of the National Flood 
        Insurance Act of 1968;''.

SEC. 12. COVERAGE FOR ADDITIONAL LIVING EXPENSES AND BUSINESS 
                    INTERRUPTION.

  Subsection (b) of section 1306 of the National Flood Insurance Act of 
1968 (42 U.S.C. 4013) is amended--
          (1) in paragraph (4), by striking ``and'' at the end;
          (2) in paragraph (5)--
                  (A) by inserting ``pursuant to paragraph (2), (3), or 
                (4)'' after ``any flood insurance coverage''; and
                  (B) by striking the period at the end and inserting a 
                semicolon; and
          (3) by adding at the end the following new paragraphs:
          ``(6) in the case of any residential property, each renewal 
        or new contract for flood insurance coverage shall provide not 
        less than $1,000 aggregate liability per dwelling unit for any 
        necessary increases in living expenses incurred by the insured 
        when losses from a flood make the residence unfit to live in, 
        which coverage shall be available only at chargeable rates that 
        are not less than the estimated premium rates for such coverage 
        determined in accordance with section 1307(a)(1);
          ``(7) in the case of any residential property, optional 
        coverage for additional living expenses described in paragraph 
        (6) shall be made available to every insured upon renewal and 
        every applicant in excess of the limits provided in paragraph 
        (6) in such amounts and at such rates as the Director shall 
        establish, except that such chargeable rates shall not be less 
        than the estimated premium rates for such coverage determined 
        in accordance with section 1307(a)(1); and
          ``(8) in the case of any commercial property or other 
        residential property, including multifamily rental property, 
        optional coverage for losses resulting from any partial or 
        total interruption of the insured's business caused by damage 
        to, or loss of, such property from a flood shall be made 
        available to every insured upon renewal and every applicant, 
        except that--
                  ``(A) the Director may provide such coverage under 
                such terms, conditions, and requirements as the 
                Director considers appropriate to meet the needs of 
                small businesses while complying with the requirement 
                under subparagraph (C); and
                  ``(B) any such coverage shall be made available only 
                at chargeable rates that are not less than the 
                estimated premium rates for such coverage determined in 
                accordance with section 1307(a)(1).''.

SEC. 13. EXCEPTION TO WAITING PERIOD FOR EFFECTIVE DATE OF POLICIES.

  Section 1306(c)(2)(A) of the National Flood Insurance Act of 1968 (42 
U.S.C. 4013(c)(2)(A)) is amended by inserting before the semicolon the 
following: ``or is in connection with the purchase or other transfer of 
the property for which the coverage is provided (regardless of whether 
a loan is involved in the purchase or transfer transaction), but only 
when such initial purchase of coverage is made not later 30 days after 
such making, increasing, extension, or renewal of the loan or not later 
than 30 days after such purchase or other transfer of the property, as 
applicable''.

SEC. 14. MINIMUM DEDUCTIBLES FOR CLAIMS.

  Section 1312 of the National Flood Insurance Act of 1968 (42 U.S.C. 
4019) is amended--
          (1) by striking ``The Director is'' and inserting the 
        following: ``(a) In General.--The Director is''; and
          (2) by adding at the end the following:
  ``(b) Minimum Annual Deductibles.--
          ``(1) Pre-FIRM properties.--For any structure that is covered 
        by flood insurance under this title, and on which construction 
        or substantial improvement occurred on or before December 31, 
        1974, or before the effective date of an initial flood 
        insurance rate map published by the Director under section 1360 
        for the area in which such structure is located, the minimum 
        annual deductible for damage to or loss of such structure shall 
        be--
                  ``(A) $1,500, if the flood insurance coverage for 
                such structure covers loss of, or physical damage to, 
                such structure in an amount equal to or less than 
                $100,000; and
                  ``(B) $2,000, if the flood insurance coverage for 
                such structure covers loss of, or physical damage to, 
                such structure in an amount greater than $100,000.
          ``(2) Post-FIRM properties.--For any structure that is 
        covered by flood insurance under this title, and on which 
        construction or substantial improvement occurred after December 
        31, 1974, or after the effective date of an initial flood 
        insurance rate map published by the Director under section 1360 
        for the area in which such structure is located, the minimum 
        annual deductible for damage to or loss of such structure shall 
        be--
                  ``(A) $750, if the flood insurance coverage for such 
                structure covers loss of, or physical damage to, such 
                structure in an amount equal to or less than $100,000; 
                and
                  ``(B) $1,000, if the flood insurance coverage for 
                such structure covers loss of, or physical damage to, 
                such structure in an amount greater than $100,000.''.

SEC. 15. PAYMENT OF PREMIUMS IN INSTALLMENTS FOR LOW-INCOME 
                    POLICYHOLDERS.

  Section 1306 of the National Flood Insurance Act of 1968 (42 U.S.C. 
4013) is amended by adding at the end the following new subsection:
  ``(d) Payment of Premiums in Installments for Low-income 
Policyholders.--In addition to any other terms and conditions under 
subsection (a), such regulations shall provide that, in the case of any 
residential property that is owned by a family whose income level is at 
or below 200 percent of the poverty line (as defined by the Office of 
Management and Budget, and revised annually in accordance with section 
673 of the Omnibus Budget Reconciliation Act of 1981 (42 U.S.C. 9902)) 
applicable to the size of such family, or a family that has no adult 
member who is employed, premiums for flood insurance coverage for such 
property may be paid in monthly installments.''.

SEC. 16. ENFORCEMENT.

  Section 102(f) of the Flood Disaster Protection Act of 1973 (42 
U.S.C. 4012a(f)) is amended--
          (1) in paragraph (2)--
                  (A) in subparagraph (A)(iii), by striking ``or'' at 
                the end;
                  (B) in subparagraph (B), by striking the period at 
                the end and inserting ``; or''; and
                  (C) by adding at the end the following new 
                subparagraph:
                  ``(C) in connection with the making, increasing, 
                extending, servicing, or renewing of any loan, 
                requiring the purchase of flood insurance coverage 
                under the National Flood Insurance Act of 1968, or 
                purchasing such coverage pursuant to subsection (e)(2), 
                in an amount in excess of the minimum amount required 
                under subsections (a) and (b) of this section.'';
          (2) in paragraph (5)--
                  (A) in the first sentence, by striking ``$350'' and 
                inserting ``$2,000''; and
                  (B) in the last sentence, by striking ``$100,000'' 
                and inserting ``$1,000,000; except that such limitation 
                shall not apply to a regulated lending institution or 
                enterprise for a calendar year if, in any three (or 
                more) of the five calendar years immediately preceding 
                such calendar year, the total amount of penalties 
                assessed under this subsection against such lending 
                institution or enterprise was $1,000,000''; and
          (3) in paragraph (6), by adding after the period at the end 
        the following: ``No penalty may be imposed under this 
        subsection on a regulated lending institution or enterprise 
        that has made a good faith effort to comply with the 
        requirements of the provisions referred to in paragraph (2) or 
        for any non-material violation of such requirements.''.

SEC. 17. NOTIFICATION TO TENANTS OF AVAILABILITY OF CONTENTS INSURANCE.

  The National Flood Insurance Act of 1968 is amended by inserting 
after section 1308 (42 U.S.C. 4015) the following new section:

``SEC. 1308A. NOTIFICATION TO TENANTS OF AVAILABILITY OF CONTENTS 
                    INSURANCE.

  ``(a) In General.--The Director shall, upon entering into a contract 
for flood insurance coverage under this title for any property--
          ``(1) provide to the insured sufficient copies of the notice 
        developed pursuant to subsection (b); and
          ``(2) require the insured to provide a copy of the notice, or 
        otherwise provide notification of the information under 
        subsection (b) in the manner that the manager or landlord deems 
        most appropriate, to each such tenant and to each new tenant 
        upon commencement of such a tenancy.
  ``(b) Notice.--Notice to a tenant of a property in accordance with 
this subsection is written notice that clearly informs a tenant--
          ``(1) whether the property is located in an area having 
        special flood hazards;
          ``(2) that flood insurance coverage is available under the 
        national flood insurance program under this title for contents 
        of the unit or structure leased by the tenant;
          ``(3) of the maximum amount of such coverage for contents 
        available under this title at that time; and
          ``(4) of where to obtain information regarding how to obtain 
        such coverage, including a telephone number, mailing address, 
        and Internet site of the Director where such information is 
        available.''.

SEC. 18. FLOOD INSURANCE OUTREACH.

  Chapter I of the National Flood Insurance Act of 1968 (42 U.S.C. 4011 
et seq.), as amended by the preceding provisions of this Act, is 
further amended by adding at the end the following new section:

``SEC. 1326. GRANTS FOR OUTREACH TO PROPERTY OWNERS AND RENTERS.

  ``(a) In General.--The Director may, to the extent amounts are made 
available pursuant to subsection (h), make grants to local governmental 
agencies responsible for floodplain management activities (including 
such agencies of Indians tribes, as such term is defined in section 4 
of the Native American Housing Assistance and Self-Determination Act of 
1996 (25 U.S.C. 4103)) in communities that participate in the national 
flood insurance program under this title, for use by such agencies to 
carry out outreach activities to encourage and facilitate the purchase 
of flood insurance protection under this Act by owners and renters of 
properties in such communities and to promote educational activities 
that increase awareness of flood risk reduction.
  ``(b) Outreach Activities.--Amounts from a grant under this section 
shall be used only for activities designed to--
          ``(1) identify owners and renters of properties in 
        communities that participate in the national flood insurance 
        program, including owners of residential and commercial 
        properties;
          ``(2) notify such owners and renters when their properties 
        become included in, or when they are excluded from, an area 
        having special flood hazards and the effect of such inclusion 
        or exclusion on the applicability of the mandatory flood 
        insurance purchase requirement under section 102 of the Flood 
        Disaster Protection Act of 1973 (42 U.S.C. 4012a) to such 
        properties;
          ``(3) educate such owners and renters regarding the flood 
        risk and reduction of this risk in their community, including 
        the continued flood risks to areas that are no longer subject 
        to the flood insurance mandatory purchase requirement;
          ``(4) educate such owners and renters regarding the benefits 
        and costs of maintaining or acquiring flood insurance, 
        including, where applicable, lower-cost preferred risk policies 
        under this title for such properties and the contents of such 
        properties; and
          ``(5) encouraging such owners and renters to maintain or 
        acquire such coverage.
  ``(c) Cost Sharing Requirement.--
          ``(1) In general.--In any fiscal year, the Director may not 
        provide a grant under this section to a local governmental 
        agency in an amount exceeding 3 times the amount that the 
        agency certifies, as the Director shall require, that the 
        agency will contribute from non-Federal funds to be used with 
        grant amounts only for carrying out activities described in 
        subsection (b).
          ``(2) Non-federal funds.--For purposes of this subsection, 
        the term `non-Federal funds' includes State or local government 
        agency amounts, in-kind contributions, any salary paid to staff 
        to carry out the eligible activities of the grant recipient, 
        the value of the time and services contributed by volunteers to 
        carry out such services (at a rate determined by the Director), 
        and the value of any donated material or building and the value 
        of any lease on a building.
  ``(d) Administrative Cost Limitation.--Notwithstanding subsection 
(b), the Director may use not more than 5 percent of amounts made 
available under subsection (g) to cover salaries, expenses, and other 
administrative costs incurred by the Director in making grants and 
provide assistance under this section.
  ``(e) Application and Selection.--
          ``(1) In general.--The Director shall provide for local 
        governmental agencies described in subsection (a) to submit 
        applications for grants under this section and for competitive 
        selection, based on criteria established by the Director, of 
        agencies submitting such applications to receive such grants.
          ``(2) Selection considerations.--In selecting applications of 
        local government agencies to receive grants under paragraph 
        (1), the Director shall consider--
                  ``(A) the existence of a cooperative technical 
                partner agreement between the local governmental agency 
                and the Federal Emergency Management Agency;
                  ``(B) the history of flood losses in the relevant 
                area that have occurred to properties, both inside and 
                outside the special flood hazards zones, which are not 
                covered by flood insurance coverage;
                  ``(C) the estimated percentage of high-risk 
                properties located in the relevant area that are not 
                covered by flood insurance;
                  ``(D) demonstrated success of the local governmental 
                agency in generating voluntary purchase of flood 
                insurance; and
                  ``(E) demonstrated technical capacity of the local 
                governmental agency for outreach to individual property 
                owners.
  ``(f) Direct Outreach by FEMA.--In each fiscal year that amounts for 
grants are made available pursuant to subsection (h), the Director may 
use not more than 50 percent of such amounts to carry out, and to enter 
into contracts with other entities to carry out, activities described 
in subsection (b) in areas that the Director determines have the most 
immediate need for such activities.
  ``(g) Reporting.--Each local government agency that receives a grant 
under this section, and each entity that receives amounts pursuant to 
subsection (f), shall submit a report to the Director, not later than 
12 months after such amounts are first received, which shall include 
such information as the Director considers appropriate to describe the 
activities conducted using such amounts and the effect of such 
activities on the retention or acquisition of flood insurance coverage.
  ``(h) Authorization of Appropriations.--There is authorized to be 
appropriated for grants under this section $50,000,000 for each of 
fiscal years 2011 through 2015.''.

SEC. 19. NOTICE OF AVAILABILITY OF FLOOD INSURANCE AND ESCROW IN RESPA 
                    GOOD FAITH ESTIMATE.

  Subsection (c) of section 5 of the Real Estate Settlement Procedures 
Act of 1974 (12 U.S.C. 2604(c)) is amended by adding at the end the 
following new sentence: ``Each such good faith estimate shall include 
the following conspicuous statements and information: (1) that flood 
insurance coverage for residential real estate is generally available 
under the national flood insurance program whether or not the real 
estate is located in an area having special flood hazards and that, to 
obtain such coverage, a home owner or purchaser should contact the 
national flood insurance program; (2) a telephone number and a location 
on the Internet by which a home owner or purchaser can contact the 
national flood insurance program; and (3) that the escrowing of flood 
insurance payments is required for many loans under section 102(d) of 
the Flood Disaster Protection Act of 1973, and may be a convenient and 
available option with respect to other loans.''.

SEC. 20. AUTHORIZATION OF ADDITIONAL FEMA STAFF.

  Notwithstanding any other provision of law, the Director of the 
Federal Emergency Management Agency may employ such additional staff as 
may be necessary to carry out all of the responsibilities of the 
Director pursuant to this Act and the amendments made by this Act. 
There are authorized to be appropriated to Director such sums as may be 
necessary for costs of employing such additional staff.

SEC. 21. PLAN TO VERIFY MAINTENANCE OF FLOOD INSURANCE ON MISSISSIPPI 
                    AND LOUISIANA PROPERTIES RECEIVING EMERGENCY 
                    SUPPLEMENTAL FUNDS.

  The Secretary of Housing and Urban Development and the Director of 
the Federal Emergency Management Agency shall jointly develop and 
implement a plan to verify that persons receiving funds under the 
Homeowner Grant Assistance Program of the State of Mississippi or the 
Road Home Program of the State of Louisiana from amounts allocated to 
the State of Mississippi or the State of Louisiana, respectively, from 
the Community development fund under the Emergency Supplemental 
Appropriations Act to Address Hurricanes in the Gulf of Mexico and 
Pandemic Influenza, 2006 (Public Law 109-148) are maintaining flood 
insurance on the property for which such persons receive such funds as 
required by each such Program.

SEC. 22. FLOOD INSURANCE ADVOCATE.

  Chapter II of the National Flood Insurance Act of 1968 is amended by 
inserting after section 1330 (42 U.S.C. 4041) the following new 
section:

``SEC. 1330A. OFFICE OF THE FLOOD INSURANCE ADVOCATE.

  ``(a) Establishment of Position.--
          ``(1) In general.--There shall be in the Federal Emergency 
        Management Agency an Office of the Flood Insurance Advocate 
        which shall be headed by the National Flood Insurance Advocate. 
        The National Flood Insurance Advocate shall report directly to 
        the Director and shall, to the extent amounts are provided 
        pursuant to subsection (f), be compensated at the same rate as 
        the highest rate of basic pay established for the Senior 
        Executive Service under section 5382 of title 5, United States 
        Code, or, if the Director so determines, at a rate fixed under 
        section 9503 of such title.
          ``(2) Appointment.--The National Flood Insurance Advocate 
        shall be appointed by the Director, and without regard to the 
        provisions of title 5, United States Code, relating to 
        appointments in the competitive service or the Senior Executive 
        Service.
          ``(3) Qualifications.--An individual appointed under 
        paragraph (2) shall have a background in customer service as 
        well as insurance.
          ``(4) Staff.--To the extent amounts are provided pursuant to 
        subsection (f), the National Flood Insurance Advocate may 
        employ such personnel as may be necessary to carry out the 
        duties of the Office.
  ``(b) Functions of Office.--
          ``(1) In general.--It shall be the function of the Office of 
        the Flood Insurance Advocate to--
                  ``(A) assist insureds under the national flood 
                insurance program in resolving problems with the 
                Federal Emergency Management Agency relating to such 
                program;
                  ``(B) identify areas in which such insureds have 
                problems in dealings with the Agency relating to such 
                program;
                  ``(C) identify potential legislative, administrative, 
                or regulatory changes which may be appropriate to 
                mitigate such problems; and
                  ``(D) assist communities and homeowners with 
                interpreting, implementing, and appealing floodplain 
                maps and floodplain map determinations.
          ``(2) Annual reports.--
                  ``(A) Activities.--Not later than December 31 of each 
                calendar year, the National Flood Insurance Advocate 
                shall report to the Committee on Financial Services of 
                the House of Representatives and the Committee on 
                Banking, Housing, and Urban Affairs of the Senate on 
                the activities of the Office of the Flood Insurance 
                Advocate during the fiscal year ending during such 
                calendar year. Any such report shall contain full and 
                substantive analysis, in addition to statistical 
                information, and shall--
                          ``(i) identify the initiatives the Office of 
                        the Flood Insurance Advocate has taken on 
                        improving services for insureds under the 
                        national flood insurance program and 
                        responsiveness of the Federal Emergency 
                        Management Agency with respect to such program;
                          ``(ii) identify areas of the law or 
                        regulations relating to the national flood 
                        insurance program that impose significant 
                        compliance burdens on such insureds or the 
                        Federal Emergency Management Agency, including 
                        specific recommendations for remedying these 
                        problems; and
                          ``(iii) include such other information as the 
                        National Flood Insurance Advocate may deem 
                        advisable.
                  ``(B) Direct submission of report.--Each report 
                required under this paragraph shall be provided 
                directly to the committees identified in subparagraph 
                (A) without any prior review or comment from the 
                Director, the Secretary of Homeland Security, or any 
                other officer or employee of the Federal Emergency 
                Management Agency or the Department of Homeland 
                Security, or the Office of Management and Budget.
  ``(c) Funding.--Pursuant to section 1310(a)(4), the Director may use 
amounts from the National Flood Insurance Fund to fund the activities 
of the Office of the Flood Advocate in each of fiscal years 2011 
through 2016, except that the amount so used in each such fiscal year 
may not exceed $5,000,000 and shall remain available until expended. 
Notwithstanding any other provision of this title, amounts made 
available pursuant to this subsection shall not be subject to 
offsetting collections through premium rates for flood insurance 
coverage under this title.''.

SEC. 23. ELIGIBILITY OF PROPERTY DEMOLITION AND REBUILDING UNDER FLOOD 
                    MITIGATION ASSISTANCE PROGRAM.

  Section 1366(e)(5)(B) of the National Flood Insurance Act of 1968 (42 
U.S.C. 4104c(e)(5)(B)) is amended by striking ``or floodproofing'' and 
inserting ``floodproofing, or demolition and rebuilding''.

SEC. 24. STUDY REGARDING MANDATORY PURCHASE REQUIREMENT FOR NON-
                    FEDERALLY RELATED LOANS.

  (a) In General.--The Comptroller General shall conduct a study to 
assess the impact, effectiveness, and feasibility of, and basis under 
the Constitution of the United States for, amending the provisions of 
the Flood Disaster Protection Act of 1973 regarding the properties that 
are subject to the mandatory flood insurance coverage purchase 
requirements under such Act to extend such requirements to any property 
that is located in any area having special flood hazards and which 
secures the repayment of a loan that is not described in paragraph (1), 
(2), or (3) of section 102(b) of such Act, and shall determine how best 
to administer and enforce such a requirement, taking into consideration 
other insurance purchase requirements under Federal and State law.
  (b) Report.--The Comptroller General shall submit a report to the 
Congress regarding the results and conclusions of the study under 
subsection (a) not later than the expiration of the 6-month period 
beginning on the date of the enactment of this Act.

SEC. 25. STUDY OF METHODS TO INCREASE FLOOD INSURANCE PROGRAM 
                    PARTICIPATION BY LOW-INCOME FAMILIES.

  (a) In General.--The Comptroller General of the United States shall 
conduct a study to identify and analyze potential methods, practices, 
and incentives that would increase the extent to which low-income 
families (as such term is defined in section 3(b) of the United States 
Housing Act of 1937 (42 U.S.C. 1437a(b))) that own residential 
properties located within areas having special flood hazards purchase 
flood insurance coverage for such properties under the national flood 
insurance program. In conducting the study, the Comptroller General 
shall analyze the effectiveness and costs of the various methods, 
practices, and incentives identified, including their effects on the 
national flood insurance program.
  (b) Report.--The Comptroller General shall submit to the Congress a 
report setting forth the conclusions of the study under this section 
not later than 12 months after the date of the enactment of this Act.

SEC. 26. REPORT ON INCLUSION OF BUILDING CODES IN FLOODPLAIN MANAGEMENT 
                    CRITERIA.

  Not later than the expiration of the 6-month period beginning on the 
date of the enactment of this Act, the Administrator of the Federal 
Emergency Management Agency shall conduct a study and submit a report 
to the Committee on Financial Services of the House of Representatives 
and the Committee on Banking, Housing, and Urban Affairs of the Senate 
regarding the impact, effectiveness, and feasibility of amending 
section 1361 of the National Flood Insurance Act of 1968 (42 U.S.C. 
4102) to include widely used and nationally recognized building codes 
as part of the floodplain management criteria developed under such 
section, and shall determine--
          (1) the regulatory, financial, and economic impacts of such a 
        building code requirement on homeowners, States and local 
        communities, local land use policies, and the Federal Emergency 
        Management Agency;
          (2) the resources required of State and local communities to 
        administer and enforce such a building code requirement;
          (3) the effectiveness of such a building code requirement in 
        reducing flood-related damage to buildings and contents;
          (4) the impact of such a building code requirement on the 
        actuarial soundness of the National Flood Insurance Program;
          (5) the effectiveness of nationally recognized codes in 
        allowing innovative materials and systems for flood-resistant 
        construction; and
          (6) the feasibility and effectiveness of providing an 
        incentive in lower premium rates for flood insurance coverage 
        under such Act for structures meeting whichever of such widely 
        used and nationally recognized building code or any applicable 
        local building code provides greater protection from flood 
        damage.

SEC. 27. STUDY ON REPAYING FLOOD INSURANCE DEBT.

  Not later than the expiration of the 6-month period beginning on the 
date of the enactment of this Act, the Administrator of the Federal 
Emergency Management Agency shall submit a report to the Congress 
setting forth a plan for repaying within 10 years all amounts, 
including any amounts previously borrowed but not yet repaid, owed 
pursuant to clause (2) of subsection (a) of section 1309 of the 
National Flood Insurance Act of 1968 (42 U.S.C. 4016(a)(2)).

SEC. 28. STUDY REGARDING IMPACT OF RATE INCREASES ON PRE-FIRM 
                    PROPERTIES.

  (a) In General.--The Comptroller General of the United States shall 
conduct a study to assess the impacts of implementing provisions 
regarding pre-FIRM properties (as such term is defined in section 
578(b) of the National Flood Insurance Reform Act of 1994 (42 U.S.C. 
4014)), including the impact on the program participation rate among 
owners, renters, and tenants of non-primary residences or commercial 
nonresidential properties. In conducting the study, the Comptroller 
General shall analyze the cost effectiveness and effect on local 
government tax base of various options, including an option of 
implementing such provisions on the severe repetitive loss properties 
only.
  (b) Report.--The Comptroller General shall submit a report to 
Congress regarding the results and conclusions of the study under 
subsection (a) not later than the expiration of the 9-month period 
beginning on the date of enactment of this Act.

SEC. 29. STUDY OF EFFECTS OF ACT.

  (a) Study.--The Administrator of the Federal Emergency Management 
Agency shall conduct a study to identify and assess the impacts, 
including short-term and long-term impacts, of this Act and the 
amendments made by this Act on the financial soundness of the national 
flood insurance program.
  (b) Report.--Not later than 12 months after the date of the enactment 
of this Act, the Administrator shall submit a report to the Congress 
setting forth the results and conclusions of study under subsection 
(a), which shall include specific recommendations for actions to 
mitigate against any negative financial impacts resulting from this Act 
and the amendments made by this Act that could increase the debt of the 
national flood insurance program.

SEC. 30. RULEMAKING.

  (a) Interim Final Rule.--The Administrator of the Federal Emergency 
Management Agency shall issue an interim final rule as a temporary 
regulation implementing this Act and the amendments made by this Act as 
soon as practicable after the date of the enactment of this Act, 
without regard to the provisions of chapter 5 of title 5, United States 
Code. All regulations prescribed under the authority of this subsection 
that are not earlier superseded by final regulations shall expire not 
later than one year after the date of the enactment of this Act.
  (b) Initiation of Rulemaking.--The Administrator of the Federal 
Emergency Management Agency may initiate a rulemaking to implement this 
Act and the amendments made by this Act as soon as practicable after 
the date of the enactment of this Act. The final rule issued pursuant 
to such rulemaking may supersede the interim final rule promulgated 
under subsection (a).

                          Purpose and Summary

    H.R. 5114, the Flood Insurance Reform Priorities Act of 
2010, reauthorizes the National Flood Insurance Program (NFIP) 
and is intended to address and highlight those reforms to the 
National Flood Insurance Act deemed most essential for the 
immediate and near-term fiscal and administrative health of the 
NFIP. The bill also ensures the NFIP's continued viability by 
encouraging broader participation, increasing financial 
accountability, eliminating unnecessary rate subsidies, and 
updating the flood insurance program to meet the needs of the 
21st century. The key provisions of H.R. 5114 include: (1) a 
five-year reauthorization of the NFIP and Severe Repetitive 
Loss Properties Pilot Program; (2) the first increase in 
available flood insurance coverage limits since 1994; (3) the 
phase-in of actuarial rates for all commercial and non-primary 
residential properties and for all properties sold after the 
date of the bill's enactment; (4) a five-year delay in the 
mandatory purchase requirement for properties in newly 
designated Special Flood Hazard Areas; (5) the five-year phase-
in of full-risk, new rates for areas newly designated as 
Special Flood Hazard Areas; (6) a requirement that FEMA treat 
state or locally funded flood control projects equally with 
federally funded projects in NFIP regulations regarding flood 
insurance mapping and rating; (7) creation of an installment 
payment program for flood insurance premiums; (8) creation of 
the office of the Flood Insurance Advocate to assist 
policyholders' interactions with the NFIP; and (8) 
establishment of penalties for lenders misrepresenting the 
requirements of the NFIP to require borrowers to purchase flood 
insurance coverage in excess of that required under the 
National Flood Insurance Act.

                  Background and Need for Legislation

    Established after decades in which the Federal Government 
was spending ever increasing amounts in disaster relief 
following annual flooding and severe flooding that followed a 
series of hurricanes in the mid-1960s, the NFIP was designed to 
alleviate taxpayers' responsibility for flood losses paid out 
in the form of post-disaster relief. The NFIP reduces future 
flood losses through: (i) flood hazard identification; (ii) 
floodplain management (i.e., land use controls and building 
codes); and, (iii) insurance protection. The NFIP is estimated 
to reduce flood loss expenses by over $1 billion annually.
    The NFIP generates premium income of approximately $2.9 
billion annually. The 2005 hurricane season resulted in 
significant claims, which the program's annual premium income 
could not cover. To cover the claims, the NFIP borrowed from 
the U.S. Treasury. The NFIP's borrowing authority was limited 
by statute to $1.5 billion. Congress made up for the shortfall 
by increasing the program's borrowing authority three times 
between September 2005 and January 2007 (from $1.5 billion to 
$20.8 billion).
    The NFIP is periodically reauthorized and was significantly 
revised in 1973, 1977, 1994, and 2004. In the 109th and 110th 
Congresses the Committee crafted and reported significant NFIP 
reform and reauthorization legislation to the full House. 
However, that legislation was never enacted and the NFIP has 
been reauthorized through a series of straight extensions from 
September 2008 to the present. On April 15th, the President 
signed yet another straight NFIP extension that provides the 
program the authority to write and renew flood insurance 
coverage through May 31, 2010.
    Flood Risk Identification & Management--Ancillary to 
providing flood insurance under the NFIP, FEMA also: (i) 
identifies and maps flood prone areas eligible to participate 
in the program; and (ii) sets land use controls and building 
codes that flood-prone communities are required to adopt and 
enforce in order to participate in the program.
    FEMA issues Flood Insurance Rate Maps (FIRMs) that 
delineate areas, called Special Flood Hazard Areas (SFHAs), 
determined to have a ``one chance in 100'' of flooding in any 
given year (the ``100-year floodplain''). Because FIRMs 
determine where and at what rate insurance under the program 
required, outdated or inaccurate FIRMs result in flood-prone 
properties either being left out of the program or being 
charged insufficient rates. FEMA is currently engaged in a 
multi-year flood map modernization program to update, revise, 
and digitize more than 20,000 flood maps, some dating back to 
the 1970s. The revising, updating and promulgation of these new 
flood maps has drawn considerable attention around the country 
as revised Special Flood Hazard Areas (SFHA) include properties 
not previously required to purchase flood insurance.
    Under the NFIP, FEMA has established minimum flood plain 
management regulations that communities must adopt and enforce 
in order to be eligible for insurance under the program. 
Related to this land-use function, the NFIP includes mitigation 
programs through which the federal government can purchase 
properties subject to repeated flood losses and reimburse 
property owners for the cost of relocating to a lower risk 
area.
    Flood Insurance--In addition to identifying and managing 
the nations flood risks, Congress created the NFIP to make 
affordable flood insurance available in areas of the country 
where flood coverage historically had been unavailable through 
the private insurance market. Insurance under the NFIP was 
initially optional and available for all properties located in 
and around SFHAs. Eligible homeowners, renters, and business 
owners purchase coverage under the program either directly from 
the NFIP or, most often, from private insurers that participate 
in the Write Your Own (WYO) program. WYO insurers take 
responsibility for policy administration and claims processing, 
but assume no financial risk in settling claims.
    In response to initially low participation in the NFIP, in 
1973 Congress made the purchase of flood insurance mandatory 
for all SFHA properties with mortgages issued or guaranteed by 
the federal government. By 1994, lax enforcement of the 
mandatory purchase requirements led Congress to require lenders 
to purchase coverage on behalf of and bill premiums to 
mortgagees who failed to purchase coverage on their own (called 
``forced placed insurance''). Since 1994, lenders who fail to 
enforce the mandatory purchase requirement are subject to civil 
penalties.
    The NFIP has a two-tiered rate structure: (i) a subsidized 
pre-FIRM rate for structures built before the 1974 mandatory 
purchase requirement went into effect for all FIRM properties; 
and, (ii) an ``actuarial'' rate for structures built or 
substantially improved after 1974. (Note that actuarial rates 
for the NFIP are not the same as actuarial rates for private 
market-based insurance. Under the NFIP, the actuarial rate has 
been less than would be charged for private, market-based flood 
insurance coverage.) Pre-FIRM rates are determined through a 
federal rule-making process with criteria designed to encourage 
participation in the program and not, by definition, to 
generate premium income sufficient to pay anticipated claims on 
pre-FIRM properties.
    Congress initially appropriated funds to make-up the 
difference between pre-FIRM and ``actuarial'' rates, expecting 
that, over time, the percentage of pre-FIRM structures would 
decline and that most or all of the structures insured under 
the program would be subject to ``actuarial'' rates. These 
appropriations ended in 1985; however, pre-FIRM structures 
continue to represent approximately 24 percent of structures 
insured under the NFIP (there are currently more than a million 
pre-FIRM properties). Between 1985 and 2005 the NFIP used its 
``actuarial'' rate premiums, interest earned on those premiums 
and borrowing authority to cover any shortfalls that resulted 
from the program's two tier rate structure.
    The program's ``actuarial'' rates are also designed, in 
part, to encourage participation in the program. As a result, 
these ``actuarial'' rates do not follow traditional rate-making 
methods designed to generate premium income sufficient to pay 
all reasonably anticipated claims and expenses. Instead, rates 
under the program are only designed to generate annual premium 
income sufficient to cover expenses and the average annual 
claims paid under the program since 1978. In ``bad'' years, 
when actual annual claims exceed the program's average annual 
claims, the NFIP has used its borrowing authority to make-up 
the shortfall. In ``good'' years, when average annual claims 
exceeded actual annual claims, the NFIP has either used surplus 
premiums to repay funds borrowed in ``bad'' years or has saved 
surplus premiums to cover above average claims in future 
``bad'' years.
    Against this changing backdrop, in the 109th and 110th 
Congresses the House passed lengthy, detailed NFIP 
reauthorization and reform legislation. While acknowledging the 
need for even more comprehensive reform, Housing and Community 
Development Subcommittee Chair Maxine Waters introduced H.R. 
5114 to highlight reform priorities identified by the 
Subcommittee in their ongoing role of monitoring and improving 
the NFIP in the context of the broader national housing and 
housing finance policy considerations.
    In addition to reauthorizing and strengthening the NFIP for 
a period of five years, H.R. 5114 sets out two consecutive five 
year periods designed to allow communities with newly 
designated SFHAs to fully understand and properly disseminate 
the flood risk information inherent in new SFHA designations. 
During the first of these five year periods, the NFIP's 
mandatory flood insurance purchase requirement does not apply 
to properties in newly designated SFHAs; however, coverage at 
full actuarial risk rates remains available to all properties 
in SFHA regardless of this five-year delay in the effective 
date of the mandatory purchase requirement for newly designated 
SFHAs. Following the five-year delay in the effective date of 
the mandatory purchase requirement for newly designated SFHAs, 
H.R. 5114 provides for a five-year phase-in period of full risk 
premium rates for properties in the newly designated SFHAs. 
Combined these two 5-year provisions allow for the reasonable, 
gradual incorporation into the NFIP of properties previously 
not required to participate in the program. As drafted the 
provisions establishing these two five-year periods run 
consecutively; however, H.R. 5114 specifically provides the 
FEMA Administrator with interim rule writing authority for the 
express purpose of allowing the Administrator flexibility 
during these transition periods to balance the goals of 
encouraging voluntary participation in the NFIP through 
incremental rate phase-in while transitioning as many 
properties to full risk premiums as expediently as possible.
    Tied integrally to the two five-year transition periods for 
properties in newly designated SFHAs are new requirements that 
FEMA and local communities develop and implement improved 
methods to communicate new and existing flood risk data to 
residents of participating communities. The flood insurance 
mandatory purchase requirement was never intended to be and 
should not be relied on to be property owners' primary notice 
as to flood risk in their community. While the mandatory 
purchase requirement must remain as a vital component of the 
NFIP, FEMA and especially local communities must take steps to 
leverage improved communications media to provide residents 
with information about potential flood risks and the 
availability of flood insurance coverage in both SFHAs and 
areas not designated as SFHAs.
    Finally, responding to instances in which federally 
regulated lending institutions require borrowers to purchase 
flood insurance coverage in excess of the value of borrowers' 
federally-backed mortgage, H.R. 5114 applies the lender 
penalties available under the National Flood Insurance Act 
(NFIA) to any lender that misrepresents the NFIA's mandatory 
purchase requirements. Lenders may still require flood 
insurance coverage beyond the NFIP mandated limit, but must 
clearly specify that the NFIA only requires coverage equal to 
the value of the outstanding indebtedness and that such 
additional coverage is not required by the NFIA.

                                Hearings

    The Subcommittee on Housing and Community Opportunity held 
a hearing entitled ``Legislative Proposals to Reform the 
National Flood Insurance Program'' on April 21, 2010. The 
following witnesses testified:

Panel One

    The Honorable Jerry Costello, Member of Congress
    The Honorable Doris Matsui, Member of Congress
    The Honorable Steve Scalise, Member of Congress
    The Honorable Gene Taylor, Member of Congress

Panel Two

    The Honorable Craig Fugate, Administrator, Federal 
Emergency Management Administration
    Ms. Orice Williams Brown, Director, Financial Markets and 
Community Investment, U.S. Government Accountability Office

Panel Three

    Mr. David R. Conrad, Senior Water Resources Specialist, 
National Wildlife Federation
    Mr. Mark Davey, President and CEO, Fidelity National 
Financial Specialty Insurance Group, on behalf of the Write 
Your Own Coalition
    Mr. Larry Larson, Executive Director, Association of State 
Flood Plain Managers
    Mr. John Rollins, President, Rollins Analytics, Inc.
    Mr. Barry Rutenberg, Second Vice Chairman of the Board, 
National Association of Homebuilders
    Mr. Maurice ``Moe'' Veissi, Veissi & Associates, First Vice 
President, National Association of REALTORS

                        Committee Consideration

    The Committee on Financial Services met in open session on 
April 27, 2010, and ordered H.R. 5114, Flood Insurance Reform 
Priorities Act of 2010, as amended, favorably reported to the 
House by a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. 
During the consideration of the bill, the following amendment 
was disposed of by a record vote. The names of Members voting 
for and against follow:
    An amendment by Mr. Maffei, no. 6, regarding no refunds for 
flood insurance coverage during periods that coverage was not 
required, was agreed to, as modified, by a record vote of 64 
yeas and 0 nays (Record vote no. 117):

                                              RECORD VOTE NO. FC-117
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................        X   ........  .........  Mr. Bachus.......  ........  ........  .........
Mr. Kanjorski..................        X   ........  .........  Mr. Castle.......        X   ........  .........
Ms. Waters.....................        X   ........  .........  Mr. King (NY)....        X   ........  .........
Mrs. Maloney...................        X   ........  .........  Mr. Royce........        X   ........  .........
Mr. Gutierrez..................  ........  ........  .........  Mr. Lucas........        X   ........  .........
Ms. Velazquez..................        X   ........  .........  Mr. Paul.........        X   ........  .........
Mr. Watt.......................        X   ........  .........  Mr. Manzullo.....        X   ........  .........
Mr. Ackerman...................        X   ........  .........  Mr. Jones........        X   ........  .........
Mr. Sherman....................        X   ........  .........  Mrs. Biggert.....        X   ........  .........
Mr. Meeks......................        X   ........  .........  Mr. Miller (CA)..        X   ........  .........
Mr. Moore (KS).................        X   ........  .........  Mrs. Capito......        X   ........  .........
Mr. Capuano....................        X   ........  .........  Mr. Hensarling...  ........  ........  .........
Mr. Hinojosa...................        X   ........  .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Clay.......................        X   ........  .........  Mr. Barrett (SC).  ........  ........  .........
Mrs. McCarthy..................        X   ........  .........  Mr. Gerlach......        X   ........  .........
Mr. Baca.......................        X   ........  .........  Mr. Neugebauer...        X   ........  .........
Mr. Lynch......................        X   ........  .........  Mr. Price (GA)...  ........  ........  .........
Mr. Miller (NC)................        X   ........  .........  Mr. McHenry......        X   ........  .........
Mr. Scott......................        X   ........  .........  Mr. Campbell.....        X   ........  .........
Mr. Green......................        X   ........  .........  Mr. Putnam.......        X   ........  .........
Mr. Cleaver....................        X   ........  .........  Mrs. Bachmann....        X   ........  .........
Ms. Bean.......................        X   ........  .........  Mr. Marchant.....        X   ........  .........
Ms. Moore (WI).................  ........  ........  .........  Mr. McCotter.....        X   ........  .........
Mr. Hodes......................  ........  ........  .........  Mr. McCarthy.....        X   ........  .........
Mr. Ellison....................        X   ........  .........  Mr. Posey........        X   ........  .........
Mr. Klein......................        X   ........  .........  Ms. Jenkins......        X   ........  .........
Mr. Wilson.....................        X   ........  .........  Mr. Lee..........        X   ........  .........
Mr. Perlmutter.................        X   ........  .........  Mr. Paulsen......        X   ........  .........
Mr. Donnelly...................        X   ........  .........  Mr. Lance........        X   ........  .........
Mr. Foster.....................        X   ........  .........
Mr. Carson.....................        X   ........  .........
Ms. Speier.....................        X   ........  .........
Mr. Childers...................        X   ........  .........
Mr. Minnick....................        X   ........  .........
Mr. Adler......................        X   ........  .........
Ms. Kilroy.....................        X   ........  .........
Mr. Driehaus...................        X   ........  .........
Ms. Kosmas.....................        X   ........  .........
Mr. Grayson....................        X   ........  .........
Mr. Himes......................        X   ........  .........
Mr. Peters.....................        X   ........  .........
Mr. Maffei.....................        X   ........  .........
----------------------------------------------------------------------------------------------------------------

    The following other amendments were also considered by the 
Committee:
    An amendment by Ms. Waters, no. 1, a manager's amendment, 
was agreed to by a voice vote.
    An amendment by Mr. Garrett (NJ), no. 2, regarding phase in 
of actuarial rates for recently purchased pre-FIRM single-
family properties, was agreed to by a voice vote.
    An amendment by Mr. Scott, no. 3, regarding payment of 
premiums in installments for low-income policyholders, was 
agreed to by a voice vote. An amendment by Ms. Speier, no. 3a, 
to the amendment, was offered and withdrawn.
    An amendment by Ms. Speier, no. 4, regarding lender 
violations, was agreed to by a voice vote.
    An amendment by Mr. Maffei, no. 5, regarding the effective 
date of flood insurance maps, was offered and withdrawn.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has held a hearing and 
made findings that are reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    H.R. 5114, the Flood Insurance Reform Priorities Act of 
2010, reauthorizes the National Flood Insurance Program and 
provides for reforms and changes to the program with the goal 
of strengthening the program and ensuring its immediate and 
near-term viability.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                                      May 17, 2010.
Hon. Barney Frank,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5114, the Flood 
Insurance Reform Priorities Act of 2010.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Daniel 
Hoople.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 5114--Flood Insurance Reform Priorities Act of 2010

    Summary: H.R. 5114 would authorize the National Flood 
Insurance Program (NFIP) of the Federal Emergency Management 
Agency (FEMA) to enter into and renew flood insurance policies 
through fiscal year 2015. Under current law, that authority 
will expire at the end of May 2010. In addition, the 
legislation would make several changes to the NFIP, which would 
increase premium income. Under both current law and under this 
legislation, CBO estimates that the NFIP could continue to make 
timely payments on valid flood insurance claims until the 
program's remaining authority to borrow from the Treasury is 
exhausted. Because provisions affecting premium income would 
have a minimal effect prior to the time the program exhausts 
the remaining borrowing authority (which, CBO estimates, would 
occur in 2013), we estimate that those changes would have no 
net effect on direct spending over the next 10 years.
    By raising certain civil penalties on lending institutions, 
CBO estimates that enacting the bill would increase revenues by 
about $1 million per year. Pay-as-you-go procedures apply 
because enacting the legislation would affect revenues.
    The legislation also would authorize the appropriation of 
$476 million over the 2011-2015 period, and $5 million in 2016, 
for mitigation and outreach programs and to establish the 
Office of Flood Insurance Advocate. The bill also would direct 
FEMA and the Government Accountability Office (GAO) to 
undertake several studies and issue reports on the NFIP. CBO 
estimates that implementing those provisions would increase 
spending by about $378 million over the next five years, 
assuming appropriation of the necessary funds.
    CBO estimates that the changes made to the NFIP by H.R. 
5114 would yield additional premium income of $2.8 billion for 
insurance policies that FEMA can offer under current law. 
However, CBO estimates that those receipts would be spent to 
pay insurance claims expected under current law, resulting in 
no net change to direct spending over the 2011-2020 period.
    H.R. 5114 would impose an intergovernmental and private-
sector mandate, as defined in the Unfunded Mandates Reform Act 
(UMRA), on public and private mortgage lenders. Because the 
mandate would require small changes in existing disclosure 
requirements, CBO expects that the cost to comply with the 
mandate would be small and fall well below the annual 
thresholds established in UMRA for intergovernmental and 
private-sector mandates ($70 million and $141 million in 2010, 
respectively, adjusted annually for inflation).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 5114 is shown in the following table. 
The costs of this legislation fall within budget function 450 
(community and regional development).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  By fiscal year, in millions of dollars--
                                                   -----------------------------------------------------------------------------------------------------
                                                     2011    2012    2013    2014    2015    2016    2017    2018    2019    2020   2011-2015  2011-2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   CHANGES IN REVENUES

Estimated Revenues................................       1       1       1       1       1       1       1       1       1       1         5         10

                                                      CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Outreach Grants:
    Authorization Level...........................      50      50      50      50      50       0       0       0       0       0       250        250
    Estimated Outlays.............................      22      50      50      50      50      28       0       0       0       0       222        250
SRL Mitigation Pilot Program:
    Authorization Level...........................      40      40      40      40      40       0       0       0       0       0       200        200
    Estimated Outlays.............................       8      24      40      40      40      32      16       0       0       0       152        200
Office of Flood Insurance Advocate:
    Authorization Level...........................       5       5       5       5       5       5       0       0       0       0        25         30
    Estimated Outlays.............................       3       5       5       5       5       5       2       0       0       0        23         30
Studies and Reports:
    Estimated Authorization Level.................       1       0       0       0       0       0       0       0       0       0         1          1
    Estimated Outlays.............................       1       0       0       0       0       0       0       0       0       0         1          1
    Total Changes:
        Estimated Authorization Level.............      96      95      95      95      95       5       0       0       0       0       476        481
        Estimated Outlays.........................      30      71      87      95      95      69      26       8       0       0       378       481
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: SRL = Severe Repetitive Loss.

    For this estimate, CBO assumes that H.R. 5114 will be 
enacted by the end of fiscal year 2010 and that amounts 
specified and estimated to be necessary will be appropriated 
for each year.

Basis of Estimate

Background

    Authority to Underwrite Coverage. The Congress established 
the NFIP to provide flood insurance coverage to property owners 
located in communities that adopt minimum guidelines for 
floodplain management and enforce building codes designed to 
minimize future flood damages. The purchase of flood insurance 
is mandatory for properties located in an area having at least 
a 1 percent chance of being flooded in any year (such an area 
is known as a Special Flood Hazard Area, or SFHA) and financed 
by a federally regulated lending institution, government-
sponsored enterprise for housing, or federal lender. Under 
current law, FEMA is authorized to underwrite the sale and 
renewal of flood insurance through May 31, 2010. However, 
following budget rules pertaining to mandatory programs, CBO's 
baseline projections of future federal spending assume that the 
NFIP will remain authorized indefinitely. Relative to that 
baseline, extending the program by this or other legislation 
would have no effect on the federal budget.
    Subsidized Premiums. Under current law, FEMA charges 
premium rates below the amount necessary to offset the expected 
cost (also known as the full-risk or actuarial cost) for 
properties built before a community's flood insurance rate map 
(FIRM) was completed (or before 1975, whichever is later). 
Those properties, which make up about 20 percent of all NFIP 
policies, are collectively known as pre-FIRM properties. FEMA 
estimates the average premium discount for pre-FIRM properties 
is about 60 percent. Some post-FIRM properties also receive a 
discounted premium under current law, but they are few in 
number (less than 1 percent of all properties) relative to pre-
FIRM properties. It is unclear whether other post-FIRM 
properties also have subsidized premiums not specified in 
law;\1\ however, for this estimate, CBO assumes that all 
actuarially based premium rates calculated by FEMA generate a 
sufficient amount of income to cover expected claims for those 
properties.
---------------------------------------------------------------------------
    \1\See Congressional Budget Office, The National Flood Insurance 
Program: Factors Affecting Actuarial Soundness (November 2009).
---------------------------------------------------------------------------
    Ability to Pay Claims and Other Expenses. The Congress 
established the National Flood Insurance Fund (NFIF) as the 
sole source of funding to pay claims and other expenses 
associated with the NFIP. The NFIF is credited with amounts 
received from advance appropriations, premium and fee income, 
interest earned on fund balances (if any), and amounts borrowed 
from the Treasury (up to the statutory limit of $20.775 
billion). Expenses of the program may only be paid to the 
extent that those sources of funds are available. Once balances 
in the fund are exhausted, property owners with valid claims 
would have to wait until sufficient resources became available 
to pay them.
    In most years since the NFIP began, advance appropriations 
along with premium and fee income have been sufficient to 
either cover the annual expenses of the NFIP or generate a 
surplus. However, because of the large subsidy that exists for 
many policies, CBO estimates that the program will--on 
average--have greater annual expenditures than income, 
necessitating the use of its authority to borrow from the 
Treasury. Mostly due to the large claims covered by the program 
following the 2005 hurricane season, the NFIP has a current 
outstanding debt of $18.75 billion to the Treasury as of May 
2010. Based on its estimate of annual subsidies, CBO expects 
that the NFIP will not repay this amount and will exhaust its 
remaining borrowing authority over the next few years. At that 
point, net spending for the program will be zero--payments 
would be limited to amounts deposited into the NFIF through 
premium and fee income, and additional borrowing would not be 
available. Thus, expenses exceeding NFIF deposits in a given 
year would be paid at a later date upon collection of future 
receipts.

Direct spending and revenues

    Civil Penalties. Section 16 would increase the civil 
penalty from $350 to $2,000 for lenders that do not enforce the 
NFIP purchase and notification requirements for certain 
mortgagors. The maximum penalties that could be levied against 
institutions in one year would increase from $100,000 to $1 
million, although no limit would exist for institutions fined 
at the maximum level in at least three of the five previous 
years. Penalty collections are recorded in the budget as 
revenues. CBO estimates that the increased collections of civil 
penalties would total about $1 million a year. The amounts 
collected would be credited to the National Flood Mitigation 
Fund and could be spent if appropriated.
    Other Changes to the NFIP. As of January 2010, the NFIP had 
approximately 5.6 million policies in force, with a total 
insured exposure of $1.2 trillion. Policyholders pay about $3.2 
billion in premiums for that coverage annually. H.R. 5114 would 
make several changes that would affect premium growth and 
exposure of the NFIP in the future. Those changes include:
         Increasing premiums for some pre-FIRM 
        policyholders;
         Delaying the mandatory purchase requirement 
        for properties recently designated as being within a 
        SFHA, and providing temporary discounted premiums for 
        such properties;
         Increasing the deductible carried by some 
        policyholders;
         Increasing the limit on average annual premium 
        growth;
         Increasing the maximum coverage for structure 
        and contents; and
         Introducing new lines of insurance for 
        additional living expenses and business interruption.
    Overall, CBO estimates that those changes would increase 
net income to the NFIP by $3.2 billion over the next 10 years. 
While this additional income would improve the financial status 
of the NFIP, it would not fully offset the existing subsidy 
built into the program under current law. Therefore, CBO 
assumes that any additional premium collected as a result of 
this legislation would be spent to pay for claims and other 
costs, resulting in no net change in direct spending.
    Premium Increases for Some Pre-FIRM Properties. Section 5 
would direct FEMA to increase flood insurance premiums for pre-
FIRM properties that are: nonresidential or not the primary 
residence of either the owner or a tenant (for example, 
vacation homes), and those purchased after enactment. Three 
years following enactment, all policyholders fitting such 
categories would begin receiving premium increases of 20 
percent per year until the amount collected each year covers 
the full cost of the insurance. New policies purchased after 
that three-year period would immediately pay the full-cost 
premium. Based on information from FEMA, CBO estimates that 
more than 400,000 properties would be subject to such rate 
increases under the bill. Owners of some of those properties 
would either drop their policies or reduce their coverage in 
response to the premium increases. However, CBO expects that 
any decrease in premium resulting from a reduction in coverage 
would be more than offset by increased collections from 
properties that remain in the program. Additionally, by 
reducing the coverage of pre-FIRM properties in the program, 
the NFIP would save the cost of paying claims on those 
subsidized policies, enhancing the financial status of the 
program.
    CBO estimates that implementing the premium increases 
outlined in the bill would raise income by about $2.8 billion 
over the 2011-2020 period. Subsidized policyholders that drop 
flood insurance coverage in response to the premium increases 
would reduce net program costs by an average of $50 million 
(mostly over the 2014-2020 period) a year over the next 10 
years, CBO estimates.
    Delay in Mandatory Purchase Requirement and Temporary 
Discounted Premiums. Section 6 of H.R. 5114 would delay the 
requirement to purchase flood insurance for some property 
owners. Owners required under current law to purchase coverage 
because their property was placed into an SFHA due to changes 
made by a flood insurance rate map that became effective later 
than August 31, 2008, would no longer be required to purchase a 
policy for five years after the effective date of the map. To 
be eligible, the property also must be located within a 
community that has developed flood evacuation, outreach, and 
communication plans. FEMA would not be authorized to provide 
refunds to policyholders no longer required to purchase flood 
insurance.
    CBO estimates that reduced coverage among post-FIRM 
policyholders as a result of this provision would have no net 
effect on the financial status of the program, as any reduction 
in premium income would be--on average--roughly offset by a 
reduction in claims payments. The reduction in premium income 
from pre-FIRM policyholders electing to drop coverage would be 
less than the cost of those subsidized properties, improving 
the financial status of the NFIP by the amount of the subsidy.
    Section 7 would direct FEMA to charge discounted premiums 
for properties relocated into a SFHA by a recently issued FIRM. 
Discounts would be as high as 80 percent immediately following 
the five-year delay specified by section 6 of the bill and 
would gradually phase out over a second five-year period. 
(Presumably, policyholders that voluntarily elect coverage 
during the initial five-year period prior to the mandatory 
purchase requirement also would receive discounted premiums, 
although this would be at the discretion of FEMA.) This 
provision would create a new class of subsidized policies 
within the NFIP. Based on the estimated number of properties 
that have been and would be placed into an SFHA, CBO estimates 
that this new subsidy would amount to about $160 million over 
the next 10 years, worsening the financial status of the 
program by that amount.
    Increase in the Minimum Policy Deductible. Section 14 would 
set the minimum deductible for structural coverage at $750 for 
post-FIRM properties ($1,000 for policies with coverage above 
$100,000) and $1,500 for pre-FIRM properties ($2,000 for 
policies with coverage above $100,000). Under current law, FEMA 
has the discretion to set the minimum deductible for flood 
insurance policies. As of May 2010, the standard deductible is 
$1,000 for post-FIRM properties and $2,000 for pre-FIRM 
properties. CBO does not expect that this legislation would 
alter the current standard deductibles because those amounts 
are greater than the minimums specified by the bill. However, 
under current regulations, pre-FIRM policyholders may reduce 
the standard deductible by $1,000 in exchange for a higher 
premium. Under the bill, those policyholders would no longer be 
able to take such action because that deductible would fall 
below the minimum required for pre-FIRM properties. Based on 
information from FEMA, CBO estimates that 250,000 policies 
(most of which are for pre-FIRM properties) would carry a 
higher deductible in the next few years as a result of this 
bill. Because the probability of payment is higher at lower 
loss levels, we estimate that this increase would reduce claims 
payments by less than 5 percent.
    Increase in Average Annual Limit on Premium Growth. Section 
8 would authorize the NFIP to increase premiums within a 
specific rate category by an average of up to 20 percent per 
year. Under current law, the limit is 10 percent. While FEMA 
has recently increased premiums at or near the current maximum 
level, CBO estimates that raising this limit would not result 
in significant increases for the largest risk categories of 
post-FIRM properties. (Increases for subsidized policies would 
be affected by other provisions of the bill.)
    Increase in Maximum Coverage and New Lines of Insurance. 
Sections 4 and 12 would increase the total amount of flood 
insurance coverage available for a residential property from 
$350,000 ($250,000 for structures and $100,000 for contents) to 
$470,000 ($335,000 for structures and $135,000 for contents), 
and for a commercial property from $1 million ($500,000 for 
structures and $500,000 for contents) to at least $1.3 million 
($670,000 for structures and $670,000 for contents). For 
commercial rental properties, maximum coverage would be 
determined by the number of dwelling units contained in the 
property. In addition, the legislation would direct FEMA to 
include coverage of up to $1,000 of living expenses in all 
future policies. Optional coverage would be available for 
living expense in excess of $1,000 and partial or total 
business interruption.
    Under the bill, the increased coverage limits and new lines 
of insurance would be offered to policyholders at the full-cost 
premium. While CBO cannot estimate the total amount of new 
insurance that would be purchased as a result of those 
provisions, we expect that any additional coverage would 
increase premium receipts to the federal government and would--
on average--be roughly offset by additional claims payments and 
other expenses.

Spending subject to appropriation

    CBO estimates that implementing H.R. 5114 would cost $378 
million over the 2011-2015 period, subject to appropriation of 
the specified amounts.
    Outreach Grants. Section 18 would authorize the 
appropriation of $50 million a year over the 2011-2015 period 
for FEMA to encourage and facilitate the purchase of flood 
insurance coverage by property owners and renters and to 
increase public awareness of flood-risk reduction. At least 
half of the funding provided would be used for grants to local 
governments that participate in the NFIP for those purposes. 
Remaining funds would be used by FEMA to directly provide 
outreach and educational activities. Assuming appropriation of 
the specified amounts, CBO estimates that implementing this 
program would cost $222 million over the 2011-2015 period.
    Severe Repetitive Loss (SRL) Mitigation Pilot Program. 
Section 3 would authorize FEMA to use up to $40 million a year 
from the NFIF to extend the SRL Mitigation Pilot Program 
through 2015. The program provides grants for up to 75 percent 
(90 percent for projects in states or Indian tribes with 
approved enhanced mitigation plans) of the cost of projects 
that reduce future damage to NFIP-insured SRL properties 
(properties that have received claims payments of greater than 
$5,000 at least four times in its history or have received at 
least two payments that together exceed the market value of the 
structure). In 2010, the Congress provided $70 million through 
the NFIF for this purpose (see Public Law 111-83). CBO 
estimates that implementing this section would cost $132 
million over the 2011-2015 period.
    Over the next 10 years, some or all of the costs of the 
mitigation program may be offset by lower claims payments, 
depending on the effectiveness of the mitigation efforts. 
Savings from lower claims payments cannot be attributed 
directly to this legislation, however, because the size and 
duration of any mitigation program would depend on amounts 
provided by future appropriations acts.
    Office of Flood Insurance Advocate. Section 22 would 
authorize FEMA to use up to $5 million a year over the 2011-
2016 period to fund activities of a new Office of Flood 
Insurance Advocate. Funding would come from the NFIF, subject 
to future appropriation action. The office would assist in 
resolving conflicts between policyholders and the NFIP and 
would propose changes in the administrative process to prevent 
future conflicts. CBO estimates that operations of the new 
office would cost $23 million over the next five years.
    Studies and Reports. H.R. 5114 would direct FEMA and GAO to 
conduct studies and issue reports on a number of topics, 
including expanding the mandatory flood insurance purchase 
requirement to all properties located in a SFHA, methods to 
increase participation among low-income families, the ability 
of the program to repay its current debt, and short- and long-
term effects of this legislation on the fmancial soundness of 
the program. CBO estimates that those activities, which would 
conclude within one year of enactment of H.R. 5114, would cost 
about $1 million in 2011, assuming appropriation of the 
necessary funds.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays and revenues that are 
subject to those pay-as-you-go procedures are shown in the 
following table.

         CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 5114, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON FINANCIAL SERVICES ON APRIL 27, 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              By fiscal year, in millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                             2010    2011    2012    2013    2014    2015    2016    2017    2018    2019    2020   2010-2015  2010-2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       NET INCREASE OR DECREASE (-) IN THE DEFICIT

Statutory Pay-As-You-Go Impact............       0      -1      -1      -1      -1      -1      -1      -1      -1      -1      -1        -5        -10
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: H.R. 5114 
would impose an intergovernmental and private-sector mandate, 
as defined in UMRA, on public and private mortgage lenders. 
Under current law, mortgage lenders who make federally related 
mortgages, as defined in 12 U.S.C. 2602, are required to 
provide a good-faith estimate of the amount or range of charges 
the borrower is likely to incur for specific settlement 
services. The bill would require such mortgage lenders to 
include specific information about the availability of flood 
insurance in each good-faith estimate. To the extent that state 
agencies issue loans or other credit instruments that would be 
subject to the requirements of the Real Estate Settlement 
Procedures Act, the bill would impose intergovernmental 
mandates.
    The mandate would require small changes in existing 
disclosure requirements. Consequently, CBO estimates that the 
cost of the mandate to public and private mortgage lenders 
would be small and fall well below the annual thresholds 
established in UMRA for intergovernmental and private-sector 
mandates ($70 million and $141 million in 2010, respectively, 
adjusted annually for inflation).

Other impacts

    State, local, and tribal governments would benefit from the 
authorization of appropriations for mitigation and outreach 
activities related to flood hazards. Any costs to those 
governments, including matching funds, would be incurred 
voluntarily.
    Estimate prepared by: Federal costs: Daniel Hoople; Impact 
on state, local, and tribal governments: Melissa Merrell; 
Impact on the private sector: Sam Wice.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 5114 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

             Section-by-Section Analysis of the Legislation

Section 1. Short title and table of contents

    This Act may be cited as the ``Flood Insurance Reform 
Priorities Act of 2010.''

Section 2. Findings and purposes

    This section sets forth findings regarding the need for 
reform of the NFIP and establishes the purposes of the Act.

Section 3. Extension of National Flood Insurance Program

    This section reauthorizes the NFIP for five years through 
2015. The current authorization of the NFIP expires in 2010. 
This section also extends the Severe Repetitive Loss Pilot 
program, which was created in the 2004 flood insurance 
legislation, through September 30, 2015.

Section 4. Maximum coverage limits

    This section increases the maximum coverage limits for 
flood insurance policies. New coverage limits are $335,000 (up 
from $250,000) for residences; $135,000 (up from $100,000) for 
residential contents; and $670,000 (up from $500,000) for 
nonresidential properties.

Section 5. Phase-in of actuarial rates for nonresidential properties, 
        certain pre-FIRM properties, and non-primary residences

    This section requires the phase-in of actuarial rates (or 
the phase-out of subsidized rates), for commercial and non-
primary residential pre-FIRM properties. The phase-in will also 
apply to pre-FIRM single principal residences sold after 
enactment of this bill. However, the phase-in does not apply to 
multifamily rental properties or rentals that are the primary 
residence of a tenant. This section takes effect three years 
after enactment.

Section 6. 5-year delay in effective date of mandatory purchase 
        requirement for new flood hazard areas

    This section delays for five years the mandatory flood 
insurance purchase requirement for areas newly designated as 
Special Flood Hazard Areas after September 1, 2008. To be 
eligible state and local governments must have plans in place 
and provide flood risk and flood crisis information to 
residents. This delay would not delay implementation of updated 
flood maps, notification of flood hazards, availability of 
flood insurance coverage, or eligibility for mitigation 
assistance. No premium refunds are available to policyholders 
for coverage purchased during a period when coverage was not 
required.

Section 7. 5-year phase-in of flood insurance rates for newly mapped 
        areas

    This section would phase in full-risk rates for areas newly 
designated as Special Flood Hazard Areas. The rate phase in 
would be 20 percent per year for five years and begin after the 
end of the mandatory flood insurance purchase requirement delay 
(see section 6).

Section 8. Increase in annual limitation on premium increases

    This section increases the annual limitation on premium 
increases from 10 percent to 20 percent.

Section 9. Consideration of construction, reconstruction, and 
        improvement of flood protection systems in determination of 
        flood insurance rates

    This section requires FEMA to treat state or locally funded 
flood control projects equally with federally funded projects 
in NFIP regulations regarding flood insurance mapping and 
rating.

Section 10. Treatment of certain flood protection projects

    In the limited instances of communities constructing a 
flood protection system in which the community relied on data 
and designs provided by a Federal agency to build such system 
and through no design default and no other fault of the 
community's FEMA has subsequently determined that the system 
will not meet 100-year risk protection standards for 
accreditation, this section directs FEMA not to impose the 
mandatory flood insurance purchase requirement and to apply 
premium rates that would apply had the system met the standards 
for accreditation.

Section 11. Notification to homeowners regarding mandatory purchase 
        requirement applicability and rate phase-ins

    This section requires FEMA and communities participating in 
the programs established in sections 6 and 10 to establish a 
plan to notify residents annually of special flood hazards. 
Such notification will include information on the affected 
areas' mandatory purchase obligations.

Section 12. Coverage for additional living expenses and business 
        interruption

    This section adds coverage for additional living expenses 
and business interruption. Coverage provided under this section 
must be risk based and actuarially sound. Coverage for 
additional living expenses shall not be less than $1,000. 
Business interruption coverage provided under this section 
shall be structured by the FEMA Administrator in a manner 
consistent with the NFIP's existing underwriting capacity.

Section 13. Exception to waiting period for effective date of policies

    This section makes flood insurance coverage effective 
immediately when a policy is purchased within 30 days of 
purchase or transfer of a property.

Section 14. Minimum deductibles for claims

    This section increases the minimum annual deductibles for 
both pre-FIRM and post-FIRM properties. The deductible for pre-
FIRM properties is increased to $1,500 for claims less than 
$100,000 and is increased to $2,000 for claims greater than 
$100,000. The deductible for post-FIRM properties is increased 
to $750 for claims less than $100,000 and increased to $1,000 
for claims greater than $100,000.

Section 15. Payment of premiums in installments for low-income 
        policyholders

    This section creates a flood insurance premium payment 
installment plan for low-income families. Low-income families 
are defined as any family with an income level at or below 200 
percent of the poverty level or that has no employed adult 
member.

Section 16. Enforcement

    This section increases to $2,000 the fine levied against 
federally-regulated lending institutions for each failure to 
enforce mandatory flood insurance purchase requirements and 
increasing the annual cap on fines for institutions to $1 
million. However, this cap will not apply to institutions that 
were assessed penalties of $1 million in any 3 of the last 5 
years. This section also contains a ``safe harbor'' for lending 
institutions that make a good faith effort to comply with 
mandatory flood insurance purchase requirements, or if such a 
violation is not material in nature. Finally, this section 
applies the penalties available under the National Flood 
Insurance Act to lenders who cite the NFIA to require flood 
coverage in excess of that required by the NFIA.

Section 17. Notification to tenants of availability of contents 
        insurance

    This section requires FEMA to require landlords to inform 
tenants about their property's location in a flood zone, the 
availability of flood insurance coverage, and how to purchase 
the coverage. This provision does not include penalties in the 
event a landlord fails to distribute the notice.

Section 18. Flood insurance outreach

    This section creates a competitive grant program for 
communities that encourage homeowners to purchase flood 
insurance, where those homeowners are not legally required to 
do so, and in general, educate all residents about the benefits 
of flood insurance. This section also requires FEMA to report 
to Congress within 60 days of enactment a description of its 
marketing and outreach efforts to educate consumers on the 
benefits of obtaining flood insurance.

Section 19. Notice of availability of flood insurance and escrow in 
        RESPA good faith estimate

    This section requires disclosure in the Real Estate 
Settlement Procedures Act (RESPA) good faith estimate about the 
availability of flood insurance and clarifies that the 
disclosure state that flood insurance is available whether you 
are in a flood zone or not.

Section 20. Authorization of additional FEMA staff

    This section authorizes necessary funds be appropriated for 
the FEMA Administrator to employ additional staff necessary to 
carry out all of the responsibilities required by this bill.

Section 21. Plan to verify maintenance of flood insurance on 
        Mississippi and Louisiana properties receiving emergency 
        supplemental funds

    This section directs FEMA and the Department of Housing and 
Urban Development (HUD) to develop a plan to verify that the 
recipients of Homeowner Assistance Grants in Mississippi and 
Road Home Grants in Louisiana, funded by HUD Community 
Development Block Grants, maintain flood insurance on their 
properties as required as a condition of the grants.

Section 22. Flood Insurance Advocate

    This section would create the position of National Flood 
Insurance Advocate in FEMA and appointed by the FEMA 
Administrator. The primary responsibilities of the Advocate 
would be to--(a) assist NFIP insureds with FEMA-related 
problems, (b) identify areas of contention between NFIP 
insureds and FEMA, (c) identify measures to mitigate such 
problems, and (d) help communities and homeowners interpret, 
implement and appeal floodplain maps. Additionally, the 
Advocate would transmit a comprehensive report to Congress 
about the initiatives undertaken by FEMA to improve the flood 
insurance program for insureds, significant burdens placed on 
the FEMA or insureds by current law or regulation, and any 
other data the Advocate deems necessary. The Advocate will be 
funded by up to $5,000,000 per fiscal year from the National 
Flood Insurance Fund.

Section 23. Eligibility of property demolition and rebuilding under 
        flood mitigation assistance program

    This section creates eligibility for property demolition 
and rebuilding under the Flood Mitigation Assistance Program.

Section 24. Study regarding mandatory purchase requirement for non-
        federally related loans

    This section requires the Government Accountability Office 
(GAO) to conduct a study on the effects of extending the 
mandatory flood insurance purchase requirement to any property 
located in any area having special flood hazard, whether or not 
the mortgage on the property is federally-backed.

Section 25. Study of methods to increase flood insurance program 
        participation by low-income families

    This section requires the GAO to study methods to increase 
participation of low-income families in the flood insurance 
program.

Section 26. Report on inclusion of building codes in floodplain 
        management criteria

    This section requires FEMA to conduct a study and report to 
Congress not later than six months after enactment regarding 
including building codes in floodplain management criteria.

Section 27. Study on repaying flood insurance debt

    This section directs FEMA to study, develop and submit to 
Congress within six months of enactment a 10-year NFIP debt 
repayment plan.

Section 28. Study regarding impact of rate increases on pre-FIRM 
        properties

    This section directs GAO to study and submit to Congress no 
later than nine months after enactment a report on the impact 
of rate increases on pre-FIRM properties, including the impact 
of such rates on program participation among owners, renters, 
and tenants of non-primary residences or commercial 
nonresidential properties.

Section 29. Study of effects of Act

    This section directs FEMA to study and submit to Congress 
no later than one year after enactment a report on the 
financial consequences of this Act.

Section 30. Rulemaking

    This section grants FEMA rulemaking authority to implement 
the provisions of this act, particularly section 6, 7, and 10, 
in a flexible and expeditious manner.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                  NATIONAL FLOOD INSURANCE ACT OF 1968

TITLE XIII--NATIONAL FLOOD INSURANCE

           *       *       *       *       *       *       *

CHAPTER I--THE NATIONAL FLOOD INSURANCE PROGRAM

           *       *       *       *       *       *       *

              NATURE AND LIMITATION OF INSURANCE COVERAGE

  Sec. 1306. (a) * * *
  (b) In addition to any other terms and conditions under 
subsection (a), such regulations shall provide that--
          (1) * * *
          (2) in the case of any residential property for which 
        the risk premium rate is determined in accordance with 
        the provisions of section 1307(a)(1), additional flood 
        insurance in excess of the limits specified in clause 
        (i) of subparagraph (A) of paragraph (1) shall be made 
        available to every insured upon renewal and every 
        applicant of insurance so as to enable such insured or 
        applicant to receive coverage up to a total amount 
        (including such limits specified in paragraph 
        (1)(A)(i)) of [$250,000] $335,000;
          (3) in the case of any residential property for which 
        the risk premium rate is determined in accordance with 
        the provisions of section 1307(a)(1), additional flood 
        insurance in excess of the limits specified in clause 
        (ii) of subparagraph (A) of paragraph (1) shall be made 
        available to every insured upon renewal and every 
        applicant for insurance so as to enable any such 
        insured or applicant to receive coverage up to a total 
        amount (including such limits specified in paragraph 
        (1)(A)(ii)) of [$100,000] $135,000;
          (4) in the case of any nonresidential property, 
        including churches, for which the risk premium rate is 
        determined in accordance with the provisions of section 
        1307(a)(1), additional flood insurance in excess of the 
        limits specified in subparagraphs (B) and (C) of 
        paragraph (1) shall be made available to every insured 
        upon renewal and every applicant for insurance, in 
        respect to any single structure, up to a total amount 
        (including such limit specified in subparagraph (B) or 
        (C) of paragraph (1), as applicable) of [$500,000] 
        $670,000 for each structure and [$500,000] $670,000 for 
        any contents related to each structure; except that, in 
        the case of any nonresidential property that is a 
        structure containing more than one dwelling unit that 
        is made available for occupancy by rental 
        (notwithstanding the provisions applicable to the 
        determination of the risk premium rate for such 
        property), additional flood insurance in excess of such 
        limits shall be made available to every insured upon 
        renewal and every applicant for insurance so as to 
        enable any such insured or applicant to receive 
        coverage up to a total amount that is equal to the 
        product of the total number of such rental dwelling 
        units in such property and the maximum coverage limit 
        per dwelling unit specified in paragraph (2); except 
        that in the case of any such multi-unit, nonresidential 
        rental property that is a pre-FIRM structure (as such 
        term is defined in section 578(b) of the National Flood 
        Insurance Reform Act of 1994 (42 U.S.C. 4014 note)), 
        the risk premium rate for the first $500,000 of 
        coverage shall be determined in accordance with section 
        1307(a)(2) and the risk premium rate for any coverage 
        in excess of such amount shall be determined in 
        accordance with section 1307(a)(1); [and]
          (5) any flood insurance coverage pursuant to 
        paragraph (2), (3), or (4) which may be made available 
        in excess of the limits specified in subparagraph (A), 
        (B), or (C) of paragraph (1), shall be based only on 
        chargeable premium rates under section 1308 which are 
        not less than the estimated premium rates under section 
        1307(a)(1), and the amount of such excess coverage 
        shall not in any case exceed an amount equal to the 
        applicable limit so specified (or allocated) under 
        paragraph (1)(C), (2), (3), or (4), as applicable[.];
          (6) in the case of any residential property, each 
        renewal or new contract for flood insurance coverage 
        shall provide not less than $1,000 aggregate liability 
        per dwelling unit for any necessary increases in living 
        expenses incurred by the insured when losses from a 
        flood make the residence unfit to live in, which 
        coverage shall be available only at chargeable rates 
        that are not less than the estimated premium rates for 
        such coverage determined in accordance with section 
        1307(a)(1);
          (7) in the case of any residential property, optional 
        coverage for additional living expenses described in 
        paragraph (6) shall be made available to every insured 
        upon renewal and every applicant in excess of the 
        limits provided in paragraph (6) in such amounts and at 
        such rates as the Director shall establish, except that 
        such chargeable rates shall not be less than the 
        estimated premium rates for such coverage determined in 
        accordance with section 1307(a)(1); and
          (8) in the case of any commercial property or other 
        residential property, including multifamily rental 
        property, optional coverage for losses resulting from 
        any partial or total interruption of the insured's 
        business caused by damage to, or loss of, such property 
        from a flood shall be made available to every insured 
        upon renewal and every applicant, except that--
                  (A) the Director may provide such coverage 
                under such terms, conditions, and requirements 
                as the Director considers appropriate to meet 
                the needs of small businesses while complying 
                with the requirement under subparagraph (C); 
                and
                  (B) any such coverage shall be made available 
                only at chargeable rates that are not less than 
                the estimated premium rates for such coverage 
                determined in accordance with section 
                1307(a)(1).
  (c) Effective Date of Policies.--
          (1) * * *
          (2) Exception.--The provisions of paragraph (1) shall 
        not apply to--
                  (A) the initial purchase of flood insurance 
                coverage under this title when the purchase of 
                insurance is in connection with the making, 
                increasing, extension, or renewal of a loan or 
                is in connection with the purchase or other 
                transfer of the property for which the coverage 
                is provided (regardless of whether a loan is 
                involved in the purchase or transfer 
                transaction), but only when such initial 
                purchase of coverage is made not later 30 days 
                after such making, increasing, extension, or 
                renewal of the loan or not later than 30 days 
                after such purchase or other transfer of the 
                property, as applicable; or

           *       *       *       *       *       *       *

  (d) Payment of Premiums in Installments for Low-income 
Policyholders.--In addition to any other terms and conditions 
under subsection (a), such regulations shall provide that, in 
the case of any residential property that is owned by a family 
whose income level is at or below 200 percent of the poverty 
line (as defined by the Office of Management and Budget, and 
revised annually in accordance with section 673 of the Omnibus 
Budget Reconciliation Act of 1981 (42 U.S.C. 9902)) applicable 
to the size of such family, or a family that has no adult 
member who is employed, premiums for flood insurance coverage 
for such property may be paid in monthly installments.

                       ESTIMATES OF PREMIUM RATES

  Sec. 1307. (a) * * *

           *       *       *       *       *       *       *

  (e) Notwithstanding any other provision of law, any community 
that has made adequate progress, acceptable to the Director, on 
the [construction of a flood protection system] construction, 
reconstruction, or improvement of a flood protection system 
(without respect to the level of Federal investment or 
participation) which will afford flood protection for the one-
hundred-year frequency flood as determined by the Director, 
shall be eligible for flood insurance under this title (if and 
to the extent it is eligible for such insurance under the other 
provisions of this title) at premium rates not exceeding those 
which would be applicable under this section if such flood 
protection system had been completed. The Director shall find 
that adequate progress on the [construction of a flood 
protection system] construction, reconstruction, or improvement 
of a flood protection system as required herein has been only 
if (1) 100 percent of the project cost of the system has been 
authorized, (2) at least 60 percent of the project cost of the 
system has been appropriated, (3) at least 50 percent of the 
project cost of the system has been expended based on the 
present value of the completed system, and (4) the system is at 
least 50 percent completed.
  (f) Notwithstanding any other provision of law, this 
subsection shall only apply in a community which has been 
determined by the Director of the Federal Emergency Management 
Agency to be in the process of restoring flood protection 
afforded by a flood protection system that had been previously 
accredited on a Flood Insurance Rate Map as providing 100-year 
frequency flood protection but no longer does so (without 
respect to the level of Federal investment or participation). 
Except as provided in this subsection, in such a community, 
flood insurance shall be made available to those properties 
impacted by the disaccreditation of the flood protection system 
at premium rates that do not exceed those which would be 
applicable to any property located in an area of special flood 
hazard, the construction of which was started prior to the 
effective date of the initial Flood Insurance Rate Map 
published by the Director for the community in which such 
property is located. A revised Flood Insurance Rate Map shall 
be prepared for the community to delineate as Zone AR the areas 
of special flood hazard, whether coastal or riverine, that 
result from the disaccreditation of the flood protection 
system. A community will be considered to be in the process of 
restoration if--
          (1) the flood protection system has been deemed 
        restorable by [a Federal agency in consultation with 
        the local project sponsor] the entity or entities that 
        own, operate, maintain, or repair such system;

           *       *       *       *       *       *       *

               ESTABLISHMENT OF CHARGEABLE PREMIUM RATES

  Sec. 1308. (a) On the basis of estimates made under section 
1307 and such other information as may be necessary, the 
Director shall from time to time, after consultation with the 
advisory committee authorized under section 1318, appropriate 
representatives of the pool formed or otherwise created under 
section 1331, and appropriate representatives of the insurance 
authorities of the respective States, prescribe by regulation 
or notice--
          (1) * * *

           *       *       *       *       *       *       *

  (c) Actuarial Rate Properties.--Subject only to [the 
limitations provided under paragraphs (1) and (2)] subsection 
(e) and subsection (g)a, the chargeable rate shall not be less 
than the applicable estimated risk premium rate for such area 
(or subdivision thereof) under section 1307(a)(1) with respect 
to the following properties:
          (1) Post-firm properties.--Any property the 
        construction or substantial improvement of which the 
        Director determines has been started after December 31, 
        1974, or started after the effective date of the 
        initial rate map published by the Director under 
        paragraph (2) of section 1360 for the area in which 
        such property is located, whichever is later[, except 
        that the chargeable rate for properties under this 
        paragraph shall be subject to the limitation under 
        subsection (e)].
          (2) Nonresidential properties.--Any nonresidential 
        property, which term shall not include any multifamily 
        rental property that consists of four or more dwelling 
        units.
          (3) Non-primary residences.--Any residential property 
        that is not the primary residence of any individual, 
        including the owner of the property or any other 
        individual who resides in the property as a tenant.
          (4) Recently purchased pre-firm single-family 
        properties used as principal residencies.--Any single 
        family property that--
                  (A) has been constructed or substantially 
                improved and for which such construction or 
                improvement was started, as determined by the 
                Director, before December 31, 1974, or before 
                the effective date of the initial rate map 
                published by the Director under paragraph (2) 
                of section 1360 for the area in which such 
                property is located, whichever is later; and
                  (B) is purchased after the date of enactment 
                of the Flood Insurance Reform Priorities Act of 
                2010.
          [(2)] (5) Certain leased coastal and river 
        properties.--Any property leased from the Federal 
        Government (including residential and nonresidential 
        properties) that the Director determines is located on 
        the river-facing side of any dike, levee, or other 
        riverine flood control structure, or seaward of any 
        seawall or other coastal flood control structure.

           *       *       *       *       *       *       *

  (e) Annual Limitation on Premium Increases.--Except with 
respect to properties described under [paragraph (2) or (3)] 
paragraph (5) of subsection (c), and notwithstanding any other 
provision of this title, the chargeable risk premium rates for 
flood insurance under this title for any properties within any 
single risk classification may not be increased by an amount 
that would result in the average of such rate increases for 
properties within the risk classification during any 12-month 
period exceeding [10 percent] 20 percent of the average of the 
risk premium rates for properties within the risk 
classification upon the commencement of such 12-month period.

           *       *       *       *       *       *       *

  (g) 5-Year Phase-In of Flood Insurance Rates for Newly Mapped 
Areas.--Notwithstanding any other provision of law relating to 
chargeable risk premium rates for flood insurance coverage 
under this title, in the case of any area that was not 
previously designated as an area having special flood hazards 
and that, pursuant to any issuance, revision, updating, or 
other change in flood insurance maps, becomes designated as 
such an area, during the 5-year period that begins upon the 
expiration of the period referred to in section 102(i)(1) of 
the Flood Disaster Protection Act of 1973 with respect to such 
area, the chargeable premium rate for flood insurance under 
this title with respect to any property that is located within 
such area shall be--
          (1) for the first year of such 5-year period, 20 
        percent of the chargeable risk premium rate otherwise 
        applicable under this title to the property;
          (2) for the second year of such 5-year period, 40 
        percent of the chargeable risk premium rate otherwise 
        applicable under this title to the property;
          (3) for the third year of such 5-year period, 60 
        percent of the chargeable risk premium rate otherwise 
        applicable under this title to the property;
          (4) for the fourth year of such 5-year period, 80 
        percent of the chargeable risk premium rate otherwise 
        applicable under this title to the property; and
          (5) for the fifth year of such 5-year period, 100 
        percent of the chargeable risk premium rate otherwise 
        applicable under this title to the property.
  (h) Treatment of Certain Flood Protection Projects.--
          (1) Inapplicability of mandatory purchase 
        requirement; premium rates.--Notwithstanding any other 
        provision of law, upon full completion, as designed, of 
        a flood protection system that was intended to provide 
        flood protection with respect to a covered area, such 
        covered area--
                  (A) shall not be considered to be an area 
                having special flood hazards for purposes of 
                this Act or subsections (a), (b), or (e) of 
                section 102, or section 202(a) of the Flood 
                Disaster Protection Act of 1973; and
                  (B) shall be eligible for flood insurance 
                under this Act, if and to the extent that such 
                area is eligible for such insurance under the 
                other provisions of this Act, at premium rates 
                not exceeding those that would be applicable 
                under this section if the flood protection 
                system referred to in paragraph (2) for such 
                area had been completed and accredited as 
                providing protection from floods at the level 
                that the system was designed to provide (before 
                construction, reconstruction, or improvement of 
                the system, as applicable, began).
        The flood insurance rate maps shall indicate, for each 
        covered area, the status of the area under 
        subparagraphs (A) and (B).
          (2) Covered area.--For purposes of this subsection, a 
        covered area is an area that was intended to be 
        protected by a flood protection system--
                  (A)(i) for which, as of April 15, 2010--
                          (I) construction, reconstruction, or 
                        improvement has not been completed;
                          (II) adequate progress, within the 
                        meaning of section 1307(e), has been 
                        made on such construction, 
                        reconstruction, or improvement; and
                          (III) is in an area having special 
                        flood hazards; or
                  (ii) for which, as of such date--
                          (I) construction, reconstruction, or 
                        improvement has been completed;
                          (II) a determination regarding 
                        accreditation has not been made; and
                          (III) is in an area having special 
                        flood hazards;
                  (B) that was designed to provide protection 
                for at least the 100-year frequency flood; and
                  (C) that has been determined, pursuant to 
                waterflow data or other scientific information 
                of a Federal agency obtained after, or that has 
                changed since, commencement of construction, 
                reconstruction, or improvement, will not 
                provide protection from floods at the level 
                referred to in subparagraph (B).

SEC. 1308A. NOTIFICATION TO TENANTS OF AVAILABILITY OF CONTENTS 
                    INSURANCE.

  (a) In General.--The Director shall, upon entering into a 
contract for flood insurance coverage under this title for any 
property--
          (1) provide to the insured sufficient copies of the 
        notice developed pursuant to subsection (b); and
          (2) require the insured to provide a copy of the 
        notice, or otherwise provide notification of the 
        information under subsection (b) in the manner that the 
        manager or landlord deems most appropriate, to each 
        such tenant and to each new tenant upon commencement of 
        such a tenancy.
  (b) Notice.--Notice to a tenant of a property in accordance 
with this subsection is written notice that clearly informs a 
tenant--
          (1) whether the property is located in an area having 
        special flood hazards;
          (2) that flood insurance coverage is available under 
        the national flood insurance program under this title 
        for contents of the unit or structure leased by the 
        tenant;
          (3) of the maximum amount of such coverage for 
        contents available under this title at that time; and
          (4) of where to obtain information regarding how to 
        obtain such coverage, including a telephone number, 
        mailing address, and Internet site of the Director 
        where such information is available.

                               FINANCING

  Sec. 1309. (a) All authority which was vested in the Housing 
and Home Finance Administrator by virtue of section 15(e) of 
the Federal Flood Insurance Act of 1956 (70 Stat. 1084) 
(pertaining to the issue of notes or other obligations or the 
Secretary of the Treasury), as amended by subsections (a) and 
(b) of section 1303 of this Act, shall be available to the 
Director for the purpose of carrying out the flood insurance 
program under this title; except that the total amount of notes 
and obligations which may be issued by the Director pursuant to 
such authority (1) without the approval of the President, may 
not exceed $500,000,000, and (2) with the approval of the 
President, may not exceed $1,500,000,000 through the date 
specified in section 1319, and $1,000,000,000 thereafter; 
except that, through [September 30, 2008] September 30, 2015, 
clause (2) of this sentence shall be applied by substituting 
``$20,775,000,000'' for ``$1,500,000,000''. The Director shall 
report to the Committee on Banking, Finance and Urban Affairs 
of the House of Representatives and the Committee on Banking, 
Housing, and Urban Affairs of the Senate at any time when he 
requests the approval of the President in accordance with the 
preceding sentence.

           *       *       *       *       *       *       *

                           PAYMENT OF CLAIMS

  Sec. 1312. (a) In General.--The Director is authorized to 
prescribe regulations establishing the general method or 
methods by which proved and approved claims for losses may be 
adjusted and paid for any damage to or loss of property which 
is covered by flood insurance made available under the 
provisions of this title.
  (b) Minimum Annual Deductibles.--
          (1) Pre-firm properties.--For any structure that is 
        covered by flood insurance under this title, and on 
        which construction or substantial improvement occurred 
        on or before December 31, 1974, or before the effective 
        date of an initial flood insurance rate map published 
        by the Director under section 1360 for the area in 
        which such structure is located, the minimum annual 
        deductible for damage to or loss of such structure 
        shall be--
                  (A) $1,500, if the flood insurance coverage 
                for such structure covers loss of, or physical 
                damage to, such structure in an amount equal to 
                or less than $100,000; and
                  (B) $2,000, if the flood insurance coverage 
                for such structure covers loss of, or physical 
                damage to, such structure in an amount greater 
                than $100,000.
          (2) Post-firm properties.--For any structure that is 
        covered by flood insurance under this title, and on 
        which construction or substantial improvement occurred 
        after December 31, 1974, or after the effective date of 
        an initial flood insurance rate map published by the 
        Director under section 1360 for the area in which such 
        structure is located, the minimum annual deductible for 
        damage to or loss of such structure shall be--
                  (A) $750, if the flood insurance coverage for 
                such structure covers loss of, or physical 
                damage to, such structure in an amount equal to 
                or less than $100,000; and
                  (B) $1,000, if the flood insurance coverage 
                for such structure covers loss of, or physical 
                damage to, such structure in an amount greater 
                than $100,000.

           *       *       *       *       *       *       *

                           PROGRAM EXPIRATION

  Sec. 1319. No new contract for flood insurance under this 
title shall be entered into after [September 30, 2008] 
September 30, 2015.

           *       *       *       *       *       *       *

SEC. 1326. GRANTS FOR OUTREACH TO PROPERTY OWNERS AND RENTERS.

  (a) In General.--The Director may, to the extent amounts are 
made available pursuant to subsection (h), make grants to local 
governmental agencies responsible for floodplain management 
activities (including such agencies of Indians tribes, as such 
term is defined in section 4 of the Native American Housing 
Assistance and Self-Determination Act of 1996 (25 U.S.C. 4103)) 
in communities that participate in the national flood insurance 
program under this title, for use by such agencies to carry out 
outreach activities to encourage and facilitate the purchase of 
flood insurance protection under this Act by owners and renters 
of properties in such communities and to promote educational 
activities that increase awareness of flood risk reduction.
  (b) Outreach Activities.--Amounts from a grant under this 
section shall be used only for activities designed to--
          (1) identify owners and renters of properties in 
        communities that participate in the national flood 
        insurance program, including owners of residential and 
        commercial properties;
          (2) notify such owners and renters when their 
        properties become included in, or when they are 
        excluded from, an area having special flood hazards and 
        the effect of such inclusion or exclusion on the 
        applicability of the mandatory flood insurance purchase 
        requirement under section 102 of the Flood Disaster 
        Protection Act of 1973 (42 U.S.C. 4012a) to such 
        properties;
          (3) educate such owners and renters regarding the 
        flood risk and reduction of this risk in their 
        community, including the continued flood risks to areas 
        that are no longer subject to the flood insurance 
        mandatory purchase requirement;
          (4) educate such owners and renters regarding the 
        benefits and costs of maintaining or acquiring flood 
        insurance, including, where applicable, lower-cost 
        preferred risk policies under this title for such 
        properties and the contents of such properties; and
          (5) encouraging such owners and renters to maintain 
        or acquire such coverage.
  (c) Cost Sharing Requirement.--
          (1) In general.--In any fiscal year, the Director may 
        not provide a grant under this section to a local 
        governmental agency in an amount exceeding 3 times the 
        amount that the agency certifies, as the Director shall 
        require, that the agency will contribute from non-
        Federal funds to be used with grant amounts only for 
        carrying out activities described in subsection (b).
          (2) Non-federal funds.--For purposes of this 
        subsection, the term ``non-Federal funds'' includes 
        State or local government agency amounts, in-kind 
        contributions, any salary paid to staff to carry out 
        the eligible activities of the grant recipient, the 
        value of the time and services contributed by 
        volunteers to carry out such services (at a rate 
        determined by the Director), and the value of any 
        donated material or building and the value of any lease 
        on a building.
  (d) Administrative Cost Limitation.--Notwithstanding 
subsection (b), the Director may use not more than 5 percent of 
amounts made available under subsection (g) to cover salaries, 
expenses, and other administrative costs incurred by the 
Director in making grants and provide assistance under this 
section.
  (e) Application and Selection.--
          (1) In general.--The Director shall provide for local 
        governmental agencies described in subsection (a) to 
        submit applications for grants under this section and 
        for competitive selection, based on criteria 
        established by the Director, of agencies submitting 
        such applications to receive such grants.
          (2) Selection considerations.--In selecting 
        applications of local government agencies to receive 
        grants under paragraph (1), the Director shall 
        consider--
                  (A) the existence of a cooperative technical 
                partner agreement between the local 
                governmental agency and the Federal Emergency 
                Management Agency;
                  (B) the history of flood losses in the 
                relevant area that have occurred to properties, 
                both inside and outside the special flood 
                hazards zones, which are not covered by flood 
                insurance coverage;
                  (C) the estimated percentage of high-risk 
                properties located in the relevant area that 
                are not covered by flood insurance;
                  (D) demonstrated success of the local 
                governmental agency in generating voluntary 
                purchase of flood insurance; and
                  (E) demonstrated technical capacity of the 
                local governmental agency for outreach to 
                individual property owners.
  (f) Direct Outreach by FEMA.--In each fiscal year that 
amounts for grants are made available pursuant to subsection 
(h), the Director may use not more than 50 percent of such 
amounts to carry out, and to enter into contracts with other 
entities to carry out, activities described in subsection (b) 
in areas that the Director determines have the most immediate 
need for such activities.
  (g) Reporting.--Each local government agency that receives a 
grant under this section, and each entity that receives amounts 
pursuant to subsection (f), shall submit a report to the 
Director, not later than 12 months after such amounts are first 
received, which shall include such information as the Director 
considers appropriate to describe the activities conducted 
using such amounts and the effect of such activities on the 
retention or acquisition of flood insurance coverage.
  (h) Authorization of Appropriations.--There is authorized to 
be appropriated for grants under this section $50,000,000 for 
each of fiscal years 2011 through 2015.

           *       *       *       *       *       *       *

  CHAPTER II--ORGANIZATION AND ADMINISTRATION OF THE FLOOD INSURANCE 
PROGRAM

           *       *       *       *       *       *       *

SEC. 1330A. OFFICE OF THE FLOOD INSURANCE ADVOCATE.

  (a) Establishment of Position.--
          (1) In general.--There shall be in the Federal 
        Emergency Management Agency an Office of the Flood 
        Insurance Advocate which shall be headed by the 
        National Flood Insurance Advocate. The National Flood 
        Insurance Advocate shall report directly to the 
        Director and shall, to the extent amounts are provided 
        pursuant to subsection (f), be compensated at the same 
        rate as the highest rate of basic pay established for 
        the Senior Executive Service under section 5382 of 
        title 5, United States Code, or, if the Director so 
        determines, at a rate fixed under section 9503 of such 
        title.
          (2) Appointment.--The National Flood Insurance 
        Advocate shall be appointed by the Director, and 
        without regard to the provisions of title 5, United 
        States Code, relating to appointments in the 
        competitive service or the Senior Executive Service.
          (3) Qualifications.--An individual appointed under 
        paragraph (2) shall have a background in customer 
        service as well as insurance.
          (4) Staff.--To the extent amounts are provided 
        pursuant to subsection (f), the National Flood 
        Insurance Advocate may employ such personnel as may be 
        necessary to carry out the duties of the Office.
  (b) Functions of Office.--
          (1) In general.--It shall be the function of the 
        Office of the Flood Insurance Advocate to--
                  (A) assist insureds under the national flood 
                insurance program in resolving problems with 
                the Federal Emergency Management Agency 
                relating to such program;
                  (B) identify areas in which such insureds 
                have problems in dealings with the Agency 
                relating to such program;
                  (C) identify potential legislative, 
                administrative, or regulatory changes which may 
                be appropriate to mitigate such problems; and
                  (D) assist communities and homeowners with 
                interpreting, implementing, and appealing 
                floodplain maps and floodplain map 
                determinations.
          (2) Annual reports.--
                  (A) Activities.--Not later than December 31 
                of each calendar year, the National Flood 
                Insurance Advocate shall report to the 
                Committee on Financial Services of the House of 
                Representatives and the Committee on Banking, 
                Housing, and Urban Affairs of the Senate on the 
                activities of the Office of the Flood Insurance 
                Advocate during the fiscal year ending during 
                such calendar year. Any such report shall 
                contain full and substantive analysis, in 
                addition to statistical information, and 
                shall--
                          (i) identify the initiatives the 
                        Office of the Flood Insurance Advocate 
                        has taken on improving services for 
                        insureds under the national flood 
                        insurance program and responsiveness of 
                        the Federal Emergency Management Agency 
                        with respect to such program;
                          (ii) identify areas of the law or 
                        regulations relating to the national 
                        flood insurance program that impose 
                        significant compliance burdens on such 
                        insureds or the Federal Emergency 
                        Management Agency, including specific 
                        recommendations for remedying these 
                        problems; and
                          (iii) include such other information 
                        as the National Flood Insurance 
                        Advocate may deem advisable.
                  (B) Direct submission of report.--Each report 
                required under this paragraph shall be provided 
                directly to the committees identified in 
                subparagraph (A) without any prior review or 
                comment from the Director, the Secretary of 
                Homeland Security, or any other officer or 
                employee of the Federal Emergency Management 
                Agency or the Department of Homeland Security, 
                or the Office of Management and Budget.
  (c) Funding.--Pursuant to section 1310(a)(4), the Director 
may use amounts from the National Flood Insurance Fund to fund 
the activities of the Office of the Flood Advocate in each of 
fiscal years 2011 through 2016, except that the amount so used 
in each such fiscal year may not exceed $5,000,000 and shall 
remain available until expended. Notwithstanding any other 
provision of this title, amounts made available pursuant to 
this subsection shall not be subject to offsetting collections 
through premium rates for flood insurance coverage under this 
title.

           *       *       *       *       *       *       *

   CHAPTER III--COORDINATION OF FLOOD INSURANCE WITH LAND-MANAGEMENT 
                     PROGRAMS IN FLOOD-PRONE AREAS

                  IDENTIFICATION OF FLOOD-PRONE AREAS

  Sec. 1360. (a) * * *

           *       *       *       *       *       *       *

  (h) Notification of Flood Map Changes.--The Director shall 
cause notice to be published in the Federal Register (or shall 
provide notice by another comparable method) of any change to 
flood insurance map panels and any change to flood insurance 
map panels issued in the form of a letter of map amendment or a 
letter of map revision. [Such] Except for notice regarding a 
change described in section 102(i)(1) of the Flood Disaster 
Protection Act of 1973 (42 U.S.C. 4012a(i)(1)), such notice 
shall be published or otherwise provided not later than 30 days 
after the map change or revision becomes effective. Notice by 
any method other than publication in the Federal Register shall 
include all pertinent information, provide for regular and 
frequent distribution, and be at least as accessible to map 
users as notice in the Federal Register. All notices under this 
subsection shall include information on how to obtain copies of 
the changes or revisions.

           *       *       *       *       *       *       *

SEC. 1361A. PILOT PROGRAM FOR MITIGATION OF SEVERE REPETITIVE LOSS 
                    PROPERTIES.

  (a) * * *

           *       *       *       *       *       *       *

  (k) Funding.--
          (1) In general.--Pursuant to section 1310(a)(8), the 
        Director may use amounts from the National Flood 
        Insurance Fund to provide assistance under this section 
        in each of fiscal years [2005, 2006, 2007, 2008, and 
        2009] 2011, 2012, 2013, 2014, and 2015, except that the 
        amount so used in each such fiscal year may not exceed 
        $40,000,000 and shall remain available until expended. 
        Notwithstanding any other provision of this title, 
        amounts made available pursuant to this subsection 
        shall not be subject to offsetting collections through 
        premium rates for flood insurance coverage under this 
        title.

           *       *       *       *       *       *       *

  [(l) Termination.--The Director may not provide assistance 
under this section to any State or community after September 
30, 2009.]

           *       *       *       *       *       *       *

                         MITIGATION ASSISTANCE

  Sec. 1366. (a) * * *

           *       *       *       *       *       *       *

  (e) Eligible Mitigation Activities.--
          (1) * * *

           *       *       *       *       *       *       *

          (5) Eligible activities.--The Director shall 
        determine whether mitigation activities described in a 
        mitigation plan submitted under subsection (d) comply 
        with the requirements under paragraph (1). Such 
        activities may include--
                  (A) * * *
                  (B) elevation, relocation, demolition, [or 
                floodproofing] floodproofing, or demolition and 
                rebuilding of structures (including public 
                structures) located in areas having special 
                flood hazards or other areas of flood risk;

           *       *       *       *       *       *       *

                              ----------                              

FLOOD DISASTER PROTECTION ACT OF 1973

           *       *       *       *       *       *       *

TITLE I--EXPANSION OF NATIONAL FLOOD INSURANCE PROGRAM

           *       *       *       *       *       *       *

    FLOOD INSURANCE PURCHASE AND COMPLIANCE REQUIREMENTS AND ESCROW 
                                ACCOUNTS

  Sec. 102. (a) * * *

           *       *       *       *       *       *       *

  (f) Civil Monetary Penalties for Failure To Require Flood 
Insurance or Notify.--
          (1) * * *
          (2) Lender violations.--The violations referred to in 
        paragraph (1) shall include--
                  (A) making, increasing, extending, or 
                renewing loans in violation of--
                          (i) * * *

           *       *       *       *       *       *       *

                          (iii) the notice requirements under 
                        section 1364 of the National Flood 
                        Insurance Act of 1968; [or]
                  (B) failure to provide notice or purchase 
                flood insurance coverage in violation of 
                subsection (e) of this section[.]; or
                  (C) in connection with the making, 
                increasing, extending, servicing, or renewing 
                of any loan, requiring the purchase of flood 
                insurance coverage under the National Flood 
                Insurance Act of 1968, or purchasing such 
                coverage pursuant to subsection (e)(2), in an 
                amount in excess of the minimum amount required 
                under subsections (a) and (b) of this section.

           *       *       *       *       *       *       *

          (5) Amount.--A civil monetary penalty under this 
        subsection may not exceed [$350] $2,000 for each 
        violation under paragraph (2) or paragraph (3). The 
        total amount of penalties assessed under this 
        subsection against any single regulated lending 
        institution or enterprise during any calendar year may 
        not exceed [$100,000] $1,000,000; except that such 
        limitation shall not apply to a regulated lending 
        institution or enterprise for a calendar year if, in 
        any three (or more) of the five calendar years 
        immediately preceding such calendar year, the total 
        amount of penalties assessed under this subsection 
        against such lending institution or enterprise was 
        $1,000,000.
          (6) Lender compliance.--Notwithstanding any State or 
        local law, for purposes of this subsection, any 
        regulated lending institution that purchases flood 
        insurance or renews a contract for flood insurance on 
        behalf of or as an agent of a borrower of a loan for 
        which flood insurance is required shall be considered 
        to have complied with the regulations issued under 
        subsection (b). No penalty may be imposed under this 
        subsection on a regulated lending institution or 
        enterprise that has made a good faith effort to comply 
        with the requirements of the provisions referred to in 
        paragraph (2) or for any non-material violation of such 
        requirements.

           *       *       *       *       *       *       *

  (i) Delayed Effective Date of Mandatory Purchase Requirement 
for New Flood Hazard Areas.--
          (1) In general.--In the case of any area that was not 
        previously designated as an area having special flood 
        hazards and that, pursuant to any issuance, revision, 
        updating, or other change in flood insurance maps that 
        takes effect on or after September 1, 2008, becomes 
        designated as an area having special flood hazards, if 
        each State and local government having jurisdiction 
        over any portion of the geographic area has complied 
        with paragraph (2), such designation shall not take 
        effect for purposes of subsection (a), (b), or (e) of 
        this section, or section 202(a) of this Act, until the 
        expiration of the 5-year period beginning upon the date 
        that such maps, as issued, revised, update, or 
        otherwise changed, become effective.
          (2) Notice requirements.--A State or local government 
        shall be considered to have complied with this 
        paragraph with respect to any geographic area described 
        in paragraph (1) only if the State or local government 
        has, before the effective date of the issued, revised, 
        updated, or changed maps, and in accordance with such 
        standards as shall be established by the Director--
                  (A) developed an evacuation plan to be 
                implemented in the event of flooding in such 
                portion of the geographic area; and
                  (B) developed and implemented an outreach and 
                communication plan to advise occupants in such 
                portion of the geographic area of potential 
                flood risks, the opportunity to purchase flood 
                insurance, and the consequences of failure to 
                purchase flood insurance.
          (3) Rule of construction.--Nothing in paragraph (1) 
        may be construed to affect the applicability of a 
        designation of any area as an area having special flood 
        hazards for purposes of the availability of flood 
        insurance coverage, criteria for land management and 
        use, notification of flood hazards, eligibility for 
        mitigation assistance, or any other purpose or 
        provision not specifically referred to in paragraph 
        (1).

               TITLE II--DISASTER MITIGATION REQUIREMENTS

                   NOTIFICATION TO FLOOD-PRONE AREAS

  Sec. 201. (a) * * *

           *       *       *       *       *       *       *

  (f) Annual Notification.--The Director, in consultation with 
affected communities, shall establish and carry out a plan to 
notify residents of areas having special flood hazards, on an 
annual basis--
          (1) that they reside in such an area;
          (2) of the geographical boundaries of such area;
          (3) of whether section 1308(h) of the National Flood 
        Insurance Act of 1968 applies to properties within such 
        area; and
          (4) of the provisions of section 102 requiring 
        purchase of flood insurance coverage for properties 
        located in such an area, including the date on which 
        such provisions apply with respect to such area, taking 
        into consideration section 102(i); and
          (5) of a general estimate of what similar homeowners 
        in similar areas typically pay for flood insurance 
        coverage, taking into consideration section 1308(g) of 
        the National Flood Insurance Act of 1968;

           *       *       *       *       *       *       *

                              ----------                              

REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974

           *       *       *       *       *       *       *

                      SPECIAL INFORMATION BOOKLETS

  Sec. 5. (a) * * *

           *       *       *       *       *       *       *

  (c) Each lender shall include with the booklet a good faith 
estimate of the amount or range of charges for specific 
settlement services the borrower is likely to incur in 
connection with the settlement as prescribed by the Secretary. 
Each such good faith estimate shall include the following 
conspicuous statements and information: (1) that flood 
insurance coverage for residential real estate is generally 
available under the national flood insurance program whether or 
not the real estate is located in an area having special flood 
hazards and that, to obtain such coverage, a home owner or 
purchaser should contact the national flood insurance program; 
(2) a telephone number and a location on the Internet by which 
a home owner or purchaser can contact the national flood 
insurance program; and (3) that the escrowing of flood 
insurance payments is required for many loans under section 
102(d) of the Flood Disaster Protection Act of 1973, and may be 
a convenient and available option with respect to other loans.

           *       *       *       *       *       *       *

                            ADDITIONAL VIEWS

    The National Flood Insurance Program (NFIP) is facing 
serious financial challenges and cannot afford to continue on 
its current path. The Government Accountability Office (GAO) 
has included the NFIP on its annual list of high-risk 
government programs since 2006 because of its ongoing potential 
to incur billions of dollars in losses. With an $18 billion 
debt to the Treasury and the persistence of subsidized premium 
rates for properties in high-risk areas, the NFIP continues to 
be underfunded and federal taxpayers remain at risk.
    While many property owners depend on flood insurance for 
some measure of financial security, and many more should 
consider purchasing it to protect themselves from potential 
losses, serious reforms are needed to make the flood insurance 
program more self sufficient, reduce the potential for losses, 
and minimize the financial risk to taxpayers.
    Many of us have been calling for fundamental reforms in a 
long-term reauthorization of the program for several years. 
Recent temporary lapses of the NFIP created uncertainty in the 
housing market and resulted in negative consequences for 
homebuyers trying to purchase required flood insurance 
protection. We believe a multi-year reauthorization with 
fundamental reforms to eliminate or phase out subsidized 
premiums is needed to help reduce the structural shortfall of 
the NFIP and protect America taxpayers.
    In this respect, H.R. 5114 represents a step in the right 
direction. The bill includes constructive reforms to eliminate 
subsidized rates over time for non-residential properties and 
non-primary residences, including second homes and vacation 
homes. H.R. 5114 also raises the annual cap on rate increases 
from 10 to 20 percent, which will allow the NFIP to charge 
premiums more appropriate to the risk within a shorter period 
of time.
    In addition, several Republican proposals have been 
incorporated into H.R. 5114 to strengthen the reforms in the 
bill, including provisions to eliminate subsidies over time for 
homes that are sold to a new owner (Garrett), impose minimum 
deductibles for all insured properties (Neugebauer), require a 
report on the feasibility of incorporating nationally 
recognized building codes into the NFIP's floodplain management 
criteria (Neugebauer), and direct the NFIP to report to 
Congress with a plan to repay its debt to the Treasury within 
ten years (Hensarling).
    We are concerned by a provision to establish a new outreach 
grant program that represents an authorization for new 
spending. While there is a need to improve FEMA's communication 
with communities and property owners about the impact of new 
flood risk maps, we would prefer this effort be undertaken 
within NFIP resources. In addition, we are concerned by 
provisions that delay the phase out of subsidies and the phase 
in of risk-based rates. There is an inherent moral hazard when 
any premium rates are subsidized, and we believe these reforms 
are urgently needed. Charging less than full-risk rates by the 
NFIP maintains a system of financial incentives backed by the 
federal government for individuals to live and build in high-
risk flood zones.
    While the NFIP was originally intended to reduce the need 
for emergency disaster assistance from federal taxpayers to 
local communities, it only partially achieves this goal and has 
a long way to go to reach its potential to be self-sufficient.

                                   Spencer Bachus.
                                   Shelley Moore Capito.
                                   Randy Neugebauer.
                                   J. Gresham Barrett.
                                   Jeb Hensarling.
                                   Scott Garrett.
                                   Walter B. Jones.
                                   Lynn Jenkins.
                                   Leonard Lance.
                                   Judy Biggert.

                                  

```