When Steven Yancheski and his wife bought their Fort Howard home at a foreclosure auction in 2010, they thought they were getting a deal: a two-bedroom bungalow in "paradise" for about $85,000.
The house was in a flood zone, so they had to pay for flood insurance, but the $800 annual premium did not deter them. However, the new $2,500 yearly rate they will start paying in March is another story.
"I would never have been able, in my way of thinking, to afford this if I would have known the flood insurance would be $2,500. It's really put me in a dilemma," Yancheski, 65, said of the premium spike for flood insurance on his Baltimore County home, which adds about $300 to his monthly mortgage payments. "I'm incredulous. I don't know what to do."
Homeowners throughout coastal Maryland face similar sticker shock, the result of a 2012 law to overhaul the National Flood Insurance Program, which serves some 5.5 million policyholders and is $24 billion in debt after a decade of catastrophic storms, including hurricanes Katrina, Isabel and Sandy. But some in Congress are now pushing to delay some price hikes just two years after voting overwhelmingly to phase out federal subsidies for the policies. The Senate voted in favor of the delay last month.
Advocates of a delay say the removal of subsidies is making premiums much costlier than expected, hurting homeowners like Yancheski and spooking waterfront housing markets.
Opponents say any delay provides a break to the rich and exacerbates problems faced by the flood insurance program.
"If you make the rates actuarially sound, the people living in high-risk situations are going to have to pay very high rates," said John Boland, a Johns Hopkins University professor emeritus who sits on a National Academy of Sciences committee that's reviewing the 2012 changes to the program. "The question is whether as a matter of public policy, that's what we want to do. That's what Congress is struggling with now."
The outcry has been compounded by the Federal Emergency Management Agency's continuing update of flood insurance rate maps, which require some property owners to pay flood insurance for the first time.
As of 2013, 65 percent of the flood insurance program's roughly 715,000 subsidized policies covered properties in counties with median household incomes in the nation's top 30 percent, according to a Government Accountability Office analysis. And 79 percent covered properties in counties with home values in the top 30 percent.
The federal government started issuing flood insurance in 1968. Congress passed a law to start a large-scale program that could offer more affordable rates than the private market, which can't handle the mass of claims that occur after a flood. Subsidies typically go to homes that predate the 1973 Flood Disaster Protection Act, which created the first flood insurance rate maps and started requiring insurance for properties in flood-prone zones with federally-backed loans.
In Maryland, about 73,200 homeowners now hold National Flood Insurance Program polices. About 12,000 received subsidies as of 2012, according to FEMA, which administers the program. Nationally, the average is about 20 percent.
The 2012 Biggert-Waters Flood Insurance Reform Act, which was supported by all 10 members of Maryland's delegation at the time, was designed to eliminate the breaks for new or lapsed policies and phase out the subsidies in pre-existing ones to shore up the insurance program's finances.
The National Association of Realtors, which supported Biggert-Waters in the hope that it would introduce certainty to the flood insurance program after years of short-term extensions, is now among the most outspoken groups calling on Congress to delay the subsidy phase-out until the government completes an "affordability" review.
"When Biggert-Waters got passed … we were very happy, but I don't think anyone understood what they put in it, that it was going to impact us as badly as it has," said Joan Strang, director of government affairs for the Eastern Shore's Coastal Association of Realtors. "Maybe [people] shouldn't be buying homes in these areas, but [Congress] didn't do a financial evaluation for what these increases were going to cost people."
About 3,000 Maryland policyholders on non-primary homes, businesses and structures exposed to repeated or severe flooding started seeing new rates in 2013, with premiums slated to rise 25 percent each year until they reach the full-risk price.
Another 6,400 properties in the state are exposed to an automatic jump to the full-risk rates prompted by a trigger, such as a change in ownership.
Real estate agents said they are watching the debate closely, worried that price increases will hurt the local market.
"The government has decided it's unaffordable for them," said Pat Savani, vice president and manager of Champion Realty in Annapolis. "I don't think they've given a lick of thought of what it means for the person who wants to buy or the person who is selling."
Others said they expect the long-term effect to be more modest.
"People that want waterfront are usually fully aware of what that entails," said Deb Valainis, office manager of Annapolis Realty Inc., which specializes in luxury waterfront property. "If they truly want waterfront or water-oriented property, they're prepared to do whatever is necessary."
Officials said they do not have firm numbers for how many Maryland properties have been or will be affected by FEMA's new flood insurance rate maps, which the agency is in the process of updating.
In 2012, Howard County officials estimated that new maps would add 360 residences and 130 other structures near rivers and streams to at-risk zones. But in Baltimore City and Baltimore County, officials said new FEMA maps removed about 1,200 and 2,000 parcels, respectively, from the zone, which FEMA estimates has a 1 percent chance of being flooded each year.
In Worcester County, county engineer William Bradshaw said the number of properties included in the proposed 100-year flood plain dropped from 25,964 to 16,283.
Beth Strommen, director of the Baltimore Office of Sustainability, said the city believes the removed properties remain at risk and recommends owners retain their insurance.
"It's not that they're removed from the flood plain, just they got a reduction in their flood insurance rates," said Strommen, adding that the city will continue to require major developments located in the 500-year flood zone to build in compliance with flood standards.
Yancheski, who served in the military and works part time as a technician for an eye doctor, said he isn't sure why he has stopped receiving a subsidized rate — whether his bank let his policy lapse, new maps changed his qualifications or FEMA started to weigh information on his elevation certificate differently.
But he said he already felt the original $777 premium was too much for insurance with a $5,000 deductible on a home that sits about 100 yards from the water.
"The bottom line is, you've got an $85,000 house. In 20 years, you're paying 80 percent of the cost just for flood insurance," he said. "For them to come up with that kind of rate, it just seems crazy."
On Jan. 30, the Senate voted 67-32 in favor of delaying up to four years premium increases that would have come as a result of new flood maps. The bill, supported by Maryland Sens. Barbara Mikulski and Benjamin Cardin, also allows homeowners with subsidized rates to pass on those policies in a sale.
Maryland Reps. Steny Hoyer, C.A. Dutch Ruppersberger and Andy Harris said they support a similar proposal in the House, where it faces a more uphill battle from budget-focused members. HR 3370 would delay increases triggered by remapping, reinstate some subsidies until FEMA performs the affordability study, and create an office to handle constituent appeals.
The Biggert-Waters Act came attached to a bigger transportation bill and needs to be reviewed, said Ruppersberger spokeswoman Jaime Lennon.
"[Biggert-Waters] is an example of a compromise that was struck to get a jobs bill moving," she said. "Now we need to make sure FEMA does its homework before the changes are implemented."
Reps. Chris Van Hollen and John Sarbanes are still reviewing the bill, according to their staffs. Reps. Elijah Cummings, John Delaney and Donna Edwards did not respond to requests for comment.
Yancheski said he is thinking about asking another surveyor to measure his home's elevation, but the increase in flood insurance premiums may mean he has to sell his house.
"I almost feel like they're pricing me … out of the area," he said. "I almost feel like I should sell my house now, get what I can out of it and let somebody else deal with it."