HUD Proposes Expanded Floodplain Rules for FHA-Financed Loans

HUD has proposed new floodplain development rules that threaten access to FHA financing for single- and multifamily builders and rely on floodplain maps that haven’t been drawn yet.

For nearly 40 years, federal floodplain requirements have been tied to the 100-year floodplain. A 2015 executive order greatly expanded the Federal Flood Risk Management Standard, offering three new options to meet it:

  • The best available climate-informed science
  • The freeboard value approach (adding elevation above the 100-year floodplain)
  • The 500-year floodplain

HUD has proposed to expand the definition of the 2015 executive order, which applies to federally funded projects, by imposing costly requirements on the FHA multifamily and single-family mortgage insurance programs.

Specifically, HUD seeks to expand its oversight using the freeboard value approach (see illustration below), corresponding both vertically and horizontally with an additional two feet of elevation above the 100-year base flood elevation for new and “substantially improved” single-family homes and multifamily properties financed using FHA-insured mortgages.


Single-family homes using FHA financing would trigger the elevation requirements only when they are built within the 100-year floodplain.

Multifamily builders would face the added burden of HUD’s elevation requirements (or floodproofing, in the case of “substantially improved” structures) both within the 100-year floodplain and in the expanded horizontal floodplain.

HUD’s new flood risk measures would also apply to projects that use federal grants, such as the HOME and Community Development Block Grant programs.

“HUD’s proposal will severely disrupt the housing market and harm affordability for millions of Americans living in areas designated under the expanded floodplain definition, where in many cases the odds of facing a flood event are extremely remote,” said NAHB Chairman Ed Brady.

In addition to the project design and structural elevation costs that will result if the proposal is implemented, HUD acknowledges that maps of the expanded floodplain don’t exist. This uncertainty will only add to project delays and costs.

HUD’s proposed rule is open for public comment until Dec. 27.

For more information, contact NAHB Environmental Policy Program Manager Owen McDonough at 800-386-5242 x8662 or NAHB Director of Multifamily Finance Michelle Kitchen at 800-386-5242 x8352.


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Comments (6)

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  1. Tom Panek says:

    Typical of the government to impose new restrictions without a reference base. As the article states, it’s also a blanket ordinance that doesn’t consider regional and historical trends. What may be good for coastal waterways and rivers etc. that typically flood in given circumstances penalizes others where a 100- year flood is the event of the century. HUD is overstepping the intent of the legislation.

  2. The current rules allow the local communities to enforce freeboard on a case by case basis. This leaves the control in the hands of the local community which is a tool that helps us to combat the sometimes egregious errors in the current mapping process. I live in the area affected by the recent flooding. All but 1 of the communities enacted the 1 foot freeboard requirement. I have photographic evidence that homes built according to the current 100 year flood plain levels survived the recent 1000 year flood event. To enact restrictions beyond the current policy is unnecessary and would be devastating to our housing industry. Every foot of fill in our region can add between $5000 and $10,000 to the cost of construction. These costs include mobilization of heavy equipment, fill dirt, and compaction testing. FEMA recently tried to enact this policy by placing the requirement in the building codes for freeboard which we in Louisiana omitted by committee. We must say no to the expanded floodplain restrictions.

  3. John says:

    I cannot even imagine the fiasco this will cause getting thousands of FEMA maps updated. The LOMR (Letter of Map Revision) process is cumbersome and lengthy as is. Having to update thousands and thousands of them would cripple the process, devalue land etc. et.

  4. Putting this is to place is a broad brush that will put undue limitations on properties that will not be affected.

  5. Kevin Kopf says:

    As this was based on an excuctive order, it should have limitations and should not be the decision of one mans opinion. HUD should not be acting so quickly without a directive from other elected officials. It seems that this should have more input from other organizations both in government and the private sector. Hopefully our system of checks and balances will start working again soon.

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