A bill in the House introduced by New York Staterepresentatives, would extend the grace period forflood-insurance-premium increases for Superstorm Sandy victims.

The legislation was introduced as information became availablethat the cost of Sandy to the National Flood Insurance Program willbe in the neighborhood of $7 billion.

Federal Emergency Management Agency officials have not respondedto repeated requests over the last several days, but sources withknowledge of the costs to the program says Sandy flood claims havetotaled about $6 billion so far, with projections to go to maybe $7billion.

One source says FEMA officials project that the cost may go alittle higher because of long-tail claims like Increased Cost ofConstruction or ICC.

These costs develop because of the need to rebuild in existingareas at higher elevations, the source says.

The source also notes that Sandy claims to the program areslowing and that "The agency has plenty of money."

The agency has borrowing authority of up to $30.4 billion. "FEMAshouldn't come close to that to pay for Sandy claims," the sourcesays.

As to the latest legislation, if enacted it would extend thepremium-increase timeline for primary residences in areas that havebeen declared a federal disaster area after July 6, 2012 from 5years to 8 years.

The bill is H.R.960, the Flood Victim Premium Relief Act of2013.

Its primary sponsors are Reps. Michael G. Grimm, R-N.Y., whorepresents Staten Island, and Gregory Meeks, D-N.Y.

Co-sponsors include Reps. Charles B. Rangel D-N.Y.; Eliot Engel,D-N.Y., and Jerold Nadler, D-N.Y., and other members of the NewYork congressional delegation.

The bill would amend the NFIP reform law of 2012 thatreauthorized the program for five years.

In order to pay off the agency's growing debt, the maximum rateincrease the NFIP could impose in a given year was raised from 10percent to 20 percent.

The proposed legislation would slow that rate of increase forSandy-stricken areas.

"If we allow flood premiums to increase on their currentschedule, based on the new maps, homeowners are going to be in animpossible position of trying to both pay their mortgage as well asincreased flood premiums that may rise over $10,000 in some cases,"Grimm says. 

He adds that this situation will almost certainly lead to asurge in defaults and foreclosures and cost the taxpayers vast sumsvia the government's exposure to Fannie Mae, Freddie Mac and theFHA. 

"Allowing an extra three years to increase premiums will giveboth homeowners and localities time make smart, long term floodmitigation and rebuilding plans," Grimm contends.