Lake Martin Voice Realty
Archive for the 'Regulations and Red Tape' Category
I will bet you didn’t know that there is a home on Lake Martin that is a full 13 feet under the water’s surface.
I didn’t know about it either until my friend and fellow realtor Gordon Pickler at RealtySouth told me about it. I don’t know why the sellers are selling it, but Gordon has it under contract and is assisting the buyers. During the course of getting it closed, they found out that our good friends at FEMA have it listed as 13 feet below the flood plain line.
(Just so you know, FEMA is the sole agency that is the judge and jury of whether or not you need flood insurance at Lake Martin. They are also the only entity that sells flood insurance. And the obvious question is how can a home sitting up above the elevation of the top of the dam be flooded?)
Anyway . . . FEMA gave Gordon’s prospective home buyers a quote of $7,218 per year for flood insurance. That sounded a little steep to the buyers so they called FEMA to appeal. No dice. FEMA was firm. They had received the surveyor’s Elevation Report – where he shot the lowest elevation of the home. FEMA insisted they read these reports all day and have used it to come up with the quote of $7,218 per year.
Undeterred, Gordon convinced the engineer that did the report to call FEMA himself and beg their case. It worked. The engineer was able to help FEMA read the report correctly – the home is 13 feet above the flood plain. Not below.
Thanks, FEMA, for another day of serving the taxpayers. True, they didn’t get any flood insurance money out of the deal, but they were able to waste a full day’s worth of time for a realtor, an engineer, and a buyer. Score another for Big Brother.
For more information on this topic, see the posts below:
In the first installment of this three part series (Extreme Seawall Failure at Lake Martin), we looked at a wooden sea wall in the Jacksons Gap area that had completely failed. Scott Henderson of Henderson & Coker Contractors in Alex City is rebuilding a new concrete seawall in its place, and he was nice enough to let me peek at the guts of this project. During the summer, when Lake Martin is at full, or nearly full pool, we only see the tops of these hugely important structures. There’s a lot going on beneath the surface, though, and winter is the time to check it out.
A lot of folks are surprised by the cost of a new seawall, and I think this video will give you an idea of why it’s so expensive, and what’s involved: a whole lot of work, and the kind of work that is best left to the experts. But if you do it right, like the homeowners of the wall under construction in this video, you won’t have to do it twice.
If you’re thinking about buying a waterfront home or lot on Lake Martin, it’s important to check out the condition of the existing sea wall, or get an estimate for a new sea wall. Home inspectors do not include sea walls in the scope of their inspections, so call a professional contractor and let him check it out for you. And, as always, you must contact Alabama Power for approval of ANY shoreline projects, including seawalls.
I’d love to help you find your Lake Martin home, so give me a call at (334) 221-5862, or click here to contact me, and let’s get to work!
This is a failed sea wall. No doubt about it. When the waters of Lake Martin are at full summer pool, structural problems like this may by hard to spot. But when the lake level is lowered in the winter, mayhem is revealed.
That’s the bad news. The good news is that winter is a great time to work on these issues. Henderson & Coker Contractors of Alex City have been hired to replace this failed wooden seawall with a concrete sea wall, and they’ve agreed to let me video the process. I followed a project of theirs in 2011 where they built a new seawall around a large peninsula that had never had a seawall. This time I thought it would be interesting to see how they deal with replacing an existing seawall.
Stay tuned for Parts 2 and 3 of this series and I bet you’ll have a new appreciation for the importance of a seawall, and the importance of a professional sea wall installation. So much of the value of a Lake Martin waterfront property is tied to the dirt it sits on. It pays to get it right.
While I don’t build sea walls at Lake Martin, I do sell homes. I’d love to be your realtor, and I’d love to discuss Lake Martin real estate with you. Give me a call at (334) 221-5862, or CLICK HERE to contact me.
My April column for Lake Magazine focuses on what to do if you realize that your neighbor is planning a construction project on their dock. Maybe you are worried about its impact on your home or lot.
What should you do?
First, go over to Lake Magazine and read the article. In short, I say you should be nice and check with Alabama Power. Their Shoreline Management Office in Dadeville can be reached at 256-825-0053.
The article was inspired by Tom and Melissa, who provided one of my funnier testimonial videos, below. They were great to work with, and served that cake that I almost dropped.
If you wonder what other people say about our services, CLICK HERE for my video testimonial collection.
If you need the name of a good company for dock and boat lift construction, call Lake Martin Dock Company. They are friends of mine and do good work. Call 334-857-2443 and let Sharon know I sent you.
Alabama Power has just notified everyone that FERC approved their request to keep the level at 483, Martin Datum, rather than going to the customary 480. The timing of this announcement has prompted many questions to me from astute Lake Martin Voice readers. I feel I must respond here.
As was widely reported by Lake Martin area media, on November 4, 2011, Alabama Power applied to FERC to have permission to keep the water three feet higher this winter. Since November 4, we have heard nothing from FERC. Cue crickets chirping.
Then, yesterday, at 10:12 AM, I clicked “Publish” on this post about Alabama Power’s unmet request.
Today, about 24 hours after I posted that, FERC consents.
Yes, in a time period faster than it took for Johnny Fontane to get “that part,” FERC went from silent to servile.
For all you conspriacy theorists out there, I give my official response:
On November 4, 2011, Alabama Power requested to keep the water level three feet higher than normal this winter.
This is old news to locals, of course, but I realized I had not posted anything about it on my blog. Sorry about that.
This has been an unusually busy fall for Lake Martin Voice Realty. Both John Christenberry and I have been blessed to have a few deals in the works and lots of people here looking for a waterfront home or lot on Lake Martin.
Alabama Power made this request to the Federal Energy Regulatory Commission (FERC). FERC is also the acronym that will decide to approve or reject Alabama Power’s application for a new rule curve for the next 30 years.
For all of the official information from Alabama Power as it relates to Lake Martin’s water level, go to this page on their website, then select “Tallapoosa River” and then “Lake Martin” in the appropriate drop down boxes. The normal winter water level for Lake Martin under the current rule curve or license is 480 feet, Martin Datum. Alabama Power has requested to keep it at 483 this year because of, in their words, “to address forecast LaNina impacts during the upcoming winter and spring months. Once approved, the lake should remain up to 3 feet higher than normal winter pool. Lake elevations are always subject to change, depending on conditions.”
If you would like to monitor the water level on Lake Martin, I think the best spot on the web is Bruce Pate’s Lake Martin.com. From here you can see the current level, and also a cool chart that allows you to compare to prior years, and to the current rule curve. Bruce also allows you to create a water level alert, customized to your needs. For instance, you might know that when the lake gets below 484 you can work on your dock or install a water pump for your landscaping. Go to Lake Martin.com and create an alert that will email you when it gets close to that amount. Neat idea!
Other Great Resources About Lake Martin’s Water Source
Lake Martin is fed by the mighty Tallapoosa River, which, I would argue (in extreme bias) is the most historically significant river that is east of the Mississippi and south of Clingman’s Dome. Here are some links to see Tallapoosa River flow numbers:
The Tallapoosa is part of the Alabama / Coosa / Tallapoosa River Basin, aka the ACT Basin. If you would like to watch water level readings for the ACT Basin, see:
There is nothing more frustrating to the closing process than to have the loan people drag their feet and not get a closing package to the attorney in time. It screws everything up. No time to properly calculate closing funds. No time to review the HUD. No time to ease into the closing. No time to savor the buying process and be happy about it. It just makes everyone irritable.
Yes, I know that you can blame it on the review committee. Yes, I realize that John Q. Homebuyer might not have sent in Form XYZ that you proclaim is so important.
But don’t you also realize that a preliminary HUD must be presented at least 24 hours before closing? I know you know. You know you know. Why can’t you make it happen? What does it say about your process that you don’t care enough to make it happen?
We give you six weeks, usually, to get it done.
At the very least, don’t tell the home buyer “yeah we can close it in 4 weeks. No problem” when what you really mean is, “even though you give us six weeks I will tell you for 5.5 weeks that everything is cool and then I will hit the panic button, blame various Orwellian committees, you, the attorney, whomever. Amidst all my blame game, I still won’t get you a loan package in time.”
No matter how many times I tell my buyer at the outset: “prepare yourself. The lender will drag their feet, not send a closing package, and therefore it will screw the whole thing up and you will end up mad” – it still frustrates me when my worst predictions come true.
Buying a home, and closing a loan, especially on Lake Martin, is supposed to be happy. Fun.
I call on all members of the home mortgage industry that are working for huge, Borg-like, just-bailed-out-with-my-money banks, to step out from behind the machinery and use your brain to make your company better.
Like Gayle and Evelle, I would rather light a candle than curse your darkness. So here’s your candle:
If you put any thought at all into buying a waterfront home on Lake Martin, there are plenty of things to consider. You might compare the price, size of the home, its view, the privacy, water depth, or any other of a number of factors.
Here’s one that I bet you haven’t thought about:
Is the home in a flood plain? Will you need flood insurance?
I know, it sounds crazy. I can hear you now:
Wait, John – Lake Martin is a man made lake, all of that water is held up by Martin Dam. Lake Martin (at some points) is more than 150 feet deep.
How can a home sitting up above the water level be concerned about being flooded? Furthermore, if a home is sitting above the elevation of the top of the dam, how can it be flooded? Impossible!
Nope. Nothing is impossible with FEMA.
Yes, FEMA. That bumbling bureaucracy that brought you Katrina Relief is at it again. They have redrawn the flood maps for much of the tri-county area that stretches over Lake Martin. Bucking a century long trend of technological advancement, this broad brushstroke made their master map less accurate. It threw many more homes into the federally designated flood zone.
Why should you care?
If you buy a Lake Martin home and your mortgage company requests certification that the home is not in a flood zone, you would be flagged.
What should you do?
Your options would either be to:
1.) pay for flood insurance (many quotes are at $3,000 per year)
2.) pay a licensed surveyor or civil engineer to come shoot the elevation ($500 – $800) and apply to FEMA for a permanent exemption for your particular home. You show this to the mortgage company, and they remove the flood insurance requirement. Obviously, most home buyers choose this option.
Crazy. It sounds like FEMA is passing along the cost of getting accurate maps to individuals.
Agreed. If you are buying a waterfront home on Lake Martin, or even refinancing one, you need to budget this money, just in case.
Wait a minute – this is nuts, you say. How can a home that sits above the elevation of the dam be worried about a flood? Shouldn’t FEMA be worried about the people DOWNSTREAM of Martin Dam? That’s like worrying about your little rubber ducky that sits in the soap dish. There is no physical way he can wash away if the tub overflows. He is above the tub.
You are being too logical. Besides, FEMA says there is a “choice” - you can just buy hugely expensive flood insurance if you don’t want to pay a surveyor. Who sells flood insurance? Oh yeah. FEMA.
To summarize: FEMA says that most of Lake Martin needs flood insurance. They can’t tell us exactly which homes need it. They need us to tell them if we need flood insurance, but only if we hire a professional. If we don’t want to hire someone, we can pay for it. They sell it.
It’s a formula that only Yossarian could appreciate.
Read more about the Lake Martin flood insurance issue here. It is a transcript from a meeting that FEMA held with concerned citizens.
From the shores of beautiful Lake Martin – here’s the second installment of the concrete seawall construction video series at Water’s Edge. In the first video we watched Henderson and Coker Contractors pour the footings, and in this video we watch them set and fill the forms for the seawall.
During the summer, when the lake is at full pool, we rarely stop to think about what is under the surface. In this case – a lot of carefully planned rebar and concrete. This sea wall will protect the huge peninsula portion of Water’s Edge from erosion for years to come.
Stay tuned for the next installment in this series . . . at this point, your guess is as good as mine about exactly what will happen in the next phase of seawall construction.
If you’re unfamiliar with Water’s Edge, check out some of these video tours below. Give me a call if you’d like to see the homes at Water’s Edge, or any property in the Lake Martin MLS.
Recently many Lake Martin area homeowners are getting letters from their lenders demanding flood insurance. A little research revealed that FEMA has redrawn the flood maps and therefore many properties are now included in different zones that lenders feel require flood insurance.
This is puzzling to many, since Lake Martin has been around since the late 1920s, and FEMA is just now making this determination. It is also confusing to me personally that a home that sits five feet above the top of Martin Dam would be considered at risk. If there is five feet of flood waters pouring over the top of Martin Dam, the dam would wash away and suddenly there would be a 90 foot drop in the water.
If you are looking for common sense answers to the above questions, this post is not the answer. Below I have copied over a handout that was written up by FEMA for the meeting and presentation they did to the Lake Martin Area Association of Realtors. I was there. They read these answers out and I guess it was helpful. Later on I will post my thoughts, and a little more boiled down, practical guide of what to do if you get a demand for flood insurance from your lender.
If you have any questions on this, feel free to contact the two people listed at the bottom, one is from FEMA, the other fom the State of Alabama.
They opened the meeting by saying that they would not be debating FEMA policy and procedures and they were not here to comment specifically about Lake Martin. I wondered, then why are you here? At any rate, here is their handout:
HANDOUT FROM FEMA:
FAQ Hand Out
Date: February 18, 2009
Presenters: Janice Mitchell, Federal Emergency Management Agency (FEMA), Region 4, Insurance Program Specialist
James K. Meredith, NFIP State Coordinator, ADECA
Subject: NFIP and Flood Insurance Requirements
Audience: Realtors, Home owners, Lake Martin Recreational Association, Lake Martin Home Owners & Boat Owners Association, Alabama Power Company personnel, Office of Water Resources personnel
The U. S. Congress established the (National Flood Insurance Program (NFIP) on August 1, 1968, with the passage of the National Flood Insurance Act of 1968. This Act enables property owners or renters in participating communities to purchase insurance protection against losses from flooding.
Participation in the NFIP is voluntary. It is based on an agreement between local communities and the Federal Government that states if a community will adopt and enforce a floodplain management ordinance to reduce future flood risks to new construction in Special Flood Hazard Areas (SFHA), the Federal Government will make flood insurance available within the community. FEMA identifies the SFHA on the Flood Hazard Boundary Map (FHBM) or the Flood Insurance Rate Map (FIRM) as determined by the hydrologic and hydraulic studies developed for the flooding sources within that community.
The NFIP was broadened and modified with the passage of the Flood Disaster Protection Act of 1973 and other legislative measures. This act established the Mandatory Purchase Guidelines. These guidelines mandate that any federally regulated lender could not make, increase extend, or renew any loan secured by improved real property located in an SFHA in a participating community unless the secured building and any personal property securing the loan were covered for the life of the loan by a flood insurance policy.
The Act was further modified by the National Flood Insurance Reform Act of 1994 and the Flood Insurance Reform Act of 2004. These established requirements to escrow flood insurance premiums when escrowing for other purposes, grants authority for lenders and servicers to force place coverage if needed, enhanced flood hazard notice requirements, established fines for lenders found not be in compliance with the guidelines, established a 30-day waiting period for the policy to become effective unless connected to a loan closing and grants authority to the lender to charge reasonable fees for determination of flood zone.
1. What triggers a review by a lender of their mortgage portfolio?
Review due to flood map change
Review due to lender review policy
Review due to economic conditions
Review due to refinancing request
Review due to equity loan request
Review due to sale of structure/property
2. Who makes the determination concerning flood exposure to property?
The lender is responsible for making a determination based on the location of the structure in relation to the special flood hazard area as shown on the Flood Insurance Rate Map (FIRM). The lender also has the right to hire a third party determination company to make these determinations. The lender or the determination company is then responsible for completing the Standard Flood Hazard Determination Form showing their determination.
3. Who is the final authority on requirement for flood insurance?
The lender is the final authority. If the structure is located within the special flood hazard area (SFHA) on the currently effective FIRM, they must require flood insurance if they have an insurable interest in that structure. If the lenders regulatory authorities perform a review of their files and find that they do not have flood insurance policies for structures located within the SFHA, that lender can face fines up to $100,000 a year.
4. What is the only government agency with the authority to “waive” flood insurance requirements?
There are only two reasons for waiving the flood insurance requirement:
a. FEMA has issued a new FIRM that is now effective and changes the zone designation to X, removing the mandatory purchase requirement; or
b. A LOMA or LOMR has been issued by FEMA changing the zone designation to X, removing the mandatory purchase requirement.
5. What is the only government agency with the authority to change a flood map?
6. What is a “45 Day Letter”?
If during the course of a loan, the lender determines that the structure is located within the SFHA and flood insurance is now required they are required to provide written notification to the borrower that flood insurance is now required and proof of having a flood policy must be provided to the lender within 45 days.
If proof is not shown within the 45 day period, the lender can then force place a flood policy to protect their interest.
7. What should you do when you receive a “45 Day Letter”?
Contact your insurance agent to obtain a flood policy and provide a copy of the declaration page to the lender to prevent the force placement of insurance at a much higher premium.
If you feel that you should not be classified as being within the SFHA, you then have time to apply for a Letter of Map Amendment (LOMA) if the property is all natural grade or a Letter of Map Revision based on Fill, (LOMR-F) if fill dirt has been used to elevate the structure. If you are granted the LOMA or LOMR-F AND IF your lender agrees to accept the letter to waive the flood insurance requirement, you may then cancel the flood policy and obtain a full refund of the current policy year.
8. Why should the owner get his policy rather than letting the lender force place it?
The force placed policy will be at a much higher premium and is often difficult to cancel.
9. How does the home owner/business owner request a waiver from FEMA?
Re quests for a waiver are made through the LOMA or LOMR-F process using the MT-1 application form for single lot or structure requests. Multi-lot or multi structure requests also use the MT-1 application package. Once the application package and all the required supporting technical data are received, FEMA will compare the lowest ground elevation touching the structure to the base flood elevation for that location. If the lowest adjacent ground (LAG) elevation is at or above the base flood elevation, FEMA is issue the LOMA or LOMR-F changing the zone designation.
10. How long does this process take?
Single lot or structure request take approximately 4 weeks one all data is received. Multi-lot or multi-structure request take approximately 8 weeks to complete. This is provided that a new hydrology or hydraulic study was not required to develop base flood elevations. If a study is submitted, the review will take longer.
11. How long will the LOMA/LOMR-F cover the structure?
The LOMA/LOMR-F will follow the structure and remain effective until such time as a new hydrologic or hydraulic study shows that the base flood elevation is now lower for that particular area.
12. What happens if FEMA does not issue a waiver?
If you have a mortgage and do not provide proof of a flood policy, the lender will force place a policy.
13. Can you avoid buying flood insurance?
Yes, pay off the mortgage
14. Will this requirement come up again if I pay off my mortgage?
Yes. If you sell the home and the buyers are taking out a mortgage, a determination will have to be made. They would have to purchase a flood insurance policy before they could close on the loan. This may cause potential buyers to have second thoughts.
15. If FEMA waives the flood insurance requirement, can the lender still require flood insurance?
Yes, the lender has the right to require flood insurance regardless of what flood zone the structure is located.
16. What is a Preferred Risk policy?
The Preferred Risk Policy (PRP) is low-cost coverage available for eligible buildings located in the moderate-risk B, C, and X zones in NFIP Regular Program communities.
The structure must be within the B, C, or X zone on the current effective FIRM.
17. What is the annual premium for an average Preferred Risk Policy?
PRP average premium is around $300. Renters may also purchase contents coverage under the PRP starting as low as $39 for $8000 worth of coverage.
18. What is the Grandfather Clause pertaining to insurance coverage?
To recognize policyholders who have built in compliance with the Flood Insurance Rate Map (FIRM) and/or remained loyal customers of the NFIP by maintaining continuous coverage, FEMA has established the “Grandfather Rule”. For such buildings, the insured would have the option of using the current rating criteria for the property or having the premium rate determined by using the BFE and/or flood zone on the FIRM (old map) in effect when the building was originally constructed, for those built in compliance, or when coverage was first obtained for those with continuous coverage.
19. If there has been a new FIRM issued for the community, there are conditions that must be met to qualify under the “Grandfathering Rule”.
1. For those properties with a policy in place, it will be renewed at the same rate so long as the referenced level floor has not been altered to be below the base flood elevation. Example – unfinished basement altered into living space.
2. New Business – May be rated based on the FIRM zone and base flood elevation on the old map in effect on the date of construction, provided that:
a. The building was build in compliance with the map in effect at the time of construction; and
b. The building has not been altered in any way that has resulted in a lowering of the elevation of the rated floor; and
c. The structure has not been substantially improved.
The property owner must provide proper documentation to the insurance provider writing the policy. The documentation must show: the date of the FIRM; the zone on that FIRM in which the property is located; the base flood elevation, if any, for that zone; a copy of the map panel showing the location of the building and the rating element that is to be grandfathered. A letter from a community official verifying this information or an Elevation Certificate is acceptable.
20. Who is qualified in the State of Alabama to execute an elevation certificate and file a LOMA or LOMR-F?
In the State of Alabama, the elevation certificate must be completed by a licensed, registered professional surveyor or a licensed professional engineer that has the authority to complete field surveys.
The Letter of Map Amendment (LOMA) or Letter of Map Revision based on Fill (LOMR-F) may be submitted by the property owner, developer, city, county, surveyor, engineer, lender or flood-search company.
The technical documentation (elevation certificate, boundary survey, site plans, etc.) attached to the LOMA or LOMR-F package must be certified by a licensed professional surveyor or engineer.
21. Would additional documentation be helpful in the LOMA filing process?
The completed MT-1 application package is required. The additional required documentation is:
Copy of the legal description shown recordation information
Copy of a subdivision plat or tax assessors map showing recordation information.
Certified boundary survey or site plan showing the locations of the structure.
Certified elevation certificate or the certified Elevation Information Form for multi-lots.
Copy of the FIRM marked to indicate the approximate location of the property in question. A FIRMETTE is acceptable.
If the property is in an approximate Zone A where the base flood elevation has not been established by FEMA, a base flood elevation developed by a professional engineer using FEMA approved methodologies will need to be developed and submitted. This could be a study developed using FEMA’s Quick-2 software which is available on our web site – www.fema.gov. It could be a study for the area that has not been submitted to FEMA and the community is using as “best available data” for compliance purposes.
22. What information, if any, could the Power Company provide to assist the home owner with application for a LOMA?
If a study developing the base flood elevations was produced on the lake or water source, the Power Company could provide the base flood elevation relevant to the property in question. If a study was not developed, historical flooding information, top of spillway or other information might be of assistance in developing a base flood elevation for the site.
23. Why is the Power Company easement contour line not the same as FEMA’s 1% chance of flood contour delineation?
Many of the lakes developed by the Power Company were developed before the passage of the National Flood Insurance Act of 1968 or before there was any regulations to determine the base flood elevation. In most cases, some type of study was done by the Power Company, but it was normally based on flood events smaller than the 1% chance storm (i.e., 10% or 2% chance) which is what the FEMA designated SFHAs are based on. The 1% chance storm is a much larger event which means the easement line and the floodplain lines would not be the same.
24. Does the Power Company easement contour line have any impact on flood insurance requirements?
The Power Company easement line gives the Power Company the right to use the land between the line and the water source for flood control purposes as needed. If the area is designated as a SFHA on the Flood Insurance Rate Map, the easement area is also considered to be a floodplain and/or floodway. This means it is still subject to all the rules and regulations adopted by the participating community. Permits are required for all development – building of docks, piers, structures, grading, paving, etc. Residential structures would have to be elevated to or above the base flood elevation as adopted by the community and would have to be equipped with the appropriate flood openings.
25. Will FEMA insure houses built completely over water?
Buildings entirely over water or principally below ground, gas and liquid storage tanks, animals, fish, aircraft, wharves, piers, bulkheads, growing crops, shrubbery, land, livestock, roads, machinery or equipment in the open, and most motor vehicles are not insurable.
26. What about other structures built over water?
If the structure is partially on land and partially over water it is insurable, but there may be some limitations on coverage.
27. Do FEMA flood regulations (44 CFR) have any regulatory authority over recreational use of water resources within the State of Alabama?
FEMA regulations found in 44 CFR Part 60.3 through Part 70 applies to the development of the land within the special flood hazard areas. It does not apply to the recreational use of the water resource. That authority would depend on the “ownership” of the water source.
Insurance Program Specialist
FEMA, Region 4
NFIP State Coordinator
State of Alabama
401 Adams Avenue
P.O. Drawer 5690
Montgomery, Alabama 36103-5690
Office: (334) 353-0853
Fax: (334) 242-0776
BlackBerry: (334) 590-4756