FEMA Buyout Information

----- Original Message -----
Sent: Friday, June 20, 2008 3:41 PM
Subject: fema buyouts
Property Acquisition (Voluntary Buyouts):
Information for Homeowners
From http://www.fema.gov/government/grant/mitmeasures/buyouts.shtm
How Buyouts Work
It is important to understand that FEMA does not buy houses directly from the property
owners. Acquisition or Buyout projects, while 75 percent funded by FEMA, are
administered by the State and local communities. The State and local communities work
together to identify areas where buyouts make the most sense. Individuals may not apply
directly to the State, but the community may sponsor an application on their behalf.
Buyouts are an important way to reduce the risk of future disasters. Money is limited and
in most cases, the amount of money set aside for mitigation cannot meet all the mitigation
needs following a disaster. States prioritize mitigation programs with input from the
communities.
Property acquisition is one of many forms of hazard mitigation but it is the most
permanent form. It removes people from harm's way forever. In a property acquisition
project, the community buys private property, acquires title to it, and then clears it. By
law, that property, which is now public property, must forever remain open space land.
The community can use it to create public parks, wildlife refuges, etc. but it cannot sell it
to private individuals nor develop it. Property acquisitions work the same way as any
other real estate transaction. Property owners who want to sell their properties will be
given fair prices for them. It is a terrific opportunity for people who live on or near
hazard areas to get to safer ground.
Fair Compensation
Communities may offer homeowners who agree to participate in a buyout project up to
the fair market value of the home BEFORE the disaster struck. A licensed appraiser hired
by the community determines the fair market value.
Voluntary Participation
Buyouts are strictly voluntary. No homeowners are ever forced to relinquish their
property. Homeowners who decide not to participate in the buyout may need to take risk
reduction measures, such as elevating their homes.
The Steps of a Buyout
Homeowners do not apply to FEMA for a buyout. Buyouts are not part of the disaster
application process and are not part of disaster assistance.
1. An application for assistance is prepared by local officials with input from the
community and those homeowners with destroyed or severely damaged
properties. The local officials will have been notified by the State of what the
State's priorities are or other special restrictions decided upon by State officials.
2. The State receives and reviews the application and submits those deemed
appropriate to FEMA for approval. FEMA reviews the applications to ensure they
follow the rules, are environmentally sound, and are a cost-effective use of funds.
3. Once FEMA gives its approval, the State begins the acquisition process. The
communities actually conduct the purchase and title transfer. Then the buildings
are removed or destroyed by the community, and the land is cleared.
Since a buyout is not a simple matter and requires a great deal of education and
community input- it does not happen overnight. It may take months for a State and the
affected communities to submit and agree to buyout proposals. Once a homeowner
accepts a buyout offer, though, the average closing takes about 45 days.
Costs the Community Will Pay
If you choose to sell your property, the community will pay the costs usually associated
with real estate transactions, including the appraisal, title search, and if necessary, lot
survey. The community will also pay the closing costs. The property owner will be
responsible for any mortgages, liens, etc., against their property...just like any other real
estate sale.
Also, like any other real estate sale, you will be responsible for the moving costs and
other costs associated with renting or buying new property. Since property acquisition
relies on voluntary participation, the government does not pay any relocation costs.
However, there are exceptions for any tenant who is displaced by an owner's decision to
sell, and for owners whose income level might preclude them from affording other
housing.
Duplication of Benefits
Because federal funds are used to acquire property, FEMA cannot duplicate the benefits
paid by one program with benefits from another source. This means that FEMA will
require the community to subtract from the purchase price the amount of other
assistance the individual property owner might receive for the same purpose. This
assistance includes flood insurance and grants that are available to individuals. However,
if the property owner has receipts showing that the money was spent for its intended
purpose (for example, repairing the home to make it livable again) the community will
not subtract that amount documented by receipts.
Advantages and Disadvantages
Individual property owners will want to weigh the advantages and disadvantages of
property acquisition. The advantages of property acquisition include:
􀂾 Peace of mind because it reduces, if not eliminates, most of your future risk
􀂾 Fair compensation generally based on the pre-flood market value of your home
􀂾 A chance for a new start
􀂾 A means of recovery that is more advantageous than repair grants or loans
􀂾 An opportunity to recoup at least partially your financial investment in a property
that has lost value
On the other hand, property acquisition has its disadvantages for you. These may include:
􀂾 Loss of roots
􀂾 Despite efforts to compensate you fairly, property acquisition may not make you
"whole" again
􀂾 The process can be lengthy. Property acquisition is not an overnight solution.
Applying for funds, waiting for approval, transferring funds, conducting
appraisals and closings, etc., take time, especially if the project involves many
properties.