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March 13, 2014

House approves flood insurance bill, enacts military bond

The Massachusetts House of Representatives on Wednesday unanimously approved legislation (H 3783) banning lenders from requiring borrowers to purchase federal flood insurance through the National Flood Insurance Program in an amount exceeding the outstanding mortgage on their property.

Rep. Michael Costello, a Democrat from Newburyport, said under the federal Biggert-Waters Act passed last year, homeowners were facing exorbitant flood insurance bills. “It gives the homeowner, rather than the lender, the ability to choose the amount of insurance,” Costello said on the House floor.

Rep. James Cantwell, a Marshfield Democrat, said the new insurance rates would have forced people out of their homes, because they would no longer be able to afford them. Rep. Josh Cutler, a Democrat from Duxbury, said the bill would “blunt the potential impact” of the new flood insurance costs.

Homeowners still have the option of purchasing additional insurance, but cannot be forced to purchase more than the value of their mortgage, Cutler said.

The Massachusetts Bankers Association has cautioned that the bill could leave borrowers significantly underinsured if they suffer a catastrophic flood loss. The association says the issue is best dealt with at the federal level, where Congress is considering proposals to deliver premium relief.

The House on Wednesday also unanimously enacted a bill authorizing $177 million in state borrowing to support federal military installations in Massachusetts, an unusual effort that supporters say is designed to preserve jobs amid the reshaping of the U.S. military.

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