WASHINGTON – The U.S. Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) today unveiled new policy updates to enhance wind and named storm insurance coverage for multifamily properties with FHA-insured mortgages. This initiative is part of HUD’s comprehensive efforts to tackle the escalating insurance costs, which have soared due to the increased frequency and severity of storms from climate change. The new policies aim to provide lenders and property owners more flexibility in securing insurance coverage at manageable costs, ensuring financial stability without compromising on necessary coverage.
HUD Acting Secretary Adrianne Todman noted, “After discussing housing affordability issues nationwide, particularly the escalating costs of insurance, we’re implementing measures to directly address these challenges.” Todman highlighted that the sharp rise in insurance costs, exacerbated by more frequent and intense weather events, is particularly burdensome for property owners striving to keep rents affordable. “Our commitment is to reduce housing expenses and enhance the resilience of communities,” she added.
The impact of extreme weather events, exacerbated by climate change, continues to devastate communities across America. HUD’s disaster recovery efforts have allocated nearly $100 billion to assist the recovery of vulnerable communities. Before today’s announcement, HUD had already begun revising how it calculates the Operating Cost Adjustment Factors (OCAF) for multifamily properties to better reflect rising insurance premiums. More initiatives are expected in the near future to further address these escalating costs nationally.
Julia Gordon, Assistant Secretary for Housing and Federal Housing Commissioner, stated, “This policy adjustment aligns FHA with industry standards and supports our efforts to continue providing affordable rental housing throughout the country.”
Effective immediately, the FHA has raised the allowable maximum deductible for wind or named storm damage to either $50,000 or five percent of the insurable value per location, with a ceiling of $475,000 per incident. This is an increase from the previous limit of $50,000 or one percent of the insurable value, capped at $250,000. Ethan Handelman, Deputy Assistant Secretary for Multifamily Housing, emphasized, “This change grants essential flexibility for lenders and property owners to secure and maintain adequate insurance against catastrophic weather events, ensuring both the development and upkeep of affordable multifamily rental housing.”
For more information, read the original press release from: https://www.hud.gov/press/press_releases_media_advisories/HUD_No_24_080