That rule doesn't mean FEMA pays for 50% of a home rebuilds it's a regulation that determines whether a damaged home needs to be brought up to current flood codes. If repairs cost 50% or more of the homes pre-damage value, it has to be rebuilt to meet those standards.
As for FEMA assistance, its not meant to cover full rebuilds like insurance would. The Individual Assistance program provides limited funds for temporary housing and essential repairs, but it wont replace a destroyed home. You’re correct that the max grant for housing assistance is around $42K, but most people receive much less. Thats why private insurance, especially flood insurance, is so important. FEMAs role is to help people get back on their feet, not to fully rebuild homes. A state representative should know that, and telling people otherwise sets them up for tremendous disappointment.