Privately obtained flood insurance in the works?

The Federal Housing Administration (FHA) has published a proposed rule on its website that would allow a private flood insurance option instead of insurance through the National Flood Insurance Program (NFIP), when flood insurance is required by FHA.

In September, the White House signed a resolution that included an extension for the NFIP until September 30, 2021.

The changes would allow lenders to begin accepting private flood insurance policies for single-family insured loans for homes located in Federal Emergency Management Agency-designated Special Flood Hazard Areas (SFHAs), consistent with similar provisions in use by other industry participants.

“Our proposal would expand the options for obtaining flood insurance, rather than continuing to lock in borrowers to one federal option without any ability to comparison shop,” said Assistant Secretary for Housing and Federal Housing Commissioner Dana Wade. “We are also proposing important safeguards that will help protect borrowers, so their homes will have flood insurance coverage at a level at or above the level available through the National Flood Insurance Program.”

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The FHA also is seeking public comment on a proposal to institute a compliance aid for private flood insurance policies. According to an FHA press release, this would allow lenders to rely on the compliance aid to determine if a private flood insurance policy meets FHA’s requirements.

The FHA said it anticipates between 3-5% of FHA borrowers could obtain a private flood insurance policy for their FHA-insured mortgage if this option becomes available.

"This proposal will remove yet another unnecessary regulatory barrier to doing business with FHA and can also reduce costs to the federal government—costs that are ultimately born by the taxpayer,” said Deputy Assistant Secretary for Single Family Housing Joe Gormley. “Allowing participation by private insurers should generate the competition needed to ultimately reduce costs for consumers.”

The proposed rule will be published in the Federal Register in the coming days and will allow a 60-day public comment period following such publication. Comments should be submitted to FHA only through the methods specified in the notice to be published in the Federal Register.

The FHA added that this is only a proposal; "current flood insurance policies remain unchanged at this time, including the requirement that minimum flood insurance be obtained through the NFIP."

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

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Flood insurance - a primer for homeowners

What is a "flood" that is covered by flood insurance?  Well, it's not a sewer backup unless you purchase that specific coverage from your insurance broker.

Writing in the Detroit Free Press Susan Tompor covers " Hard lessons about flood insurance policies."  Among them, know what your policy insures.

Many sewer lines across the country are aging. Pipelines that handle both storm water and sewage can become overwhelmed and back up.

J. Robert Hunter, director of insurance for the Consumer Federation of America, said his son faced damage from a backed-up sewer in Baltimore and was covered. But he said many people don’t realize they need to buy an endorsement or they don’t ask if their standard policy offers the coverage.

So, before the next storm or sewer backup, it might be a good idea to check your flood insurance and homeowner's insurance policies to determine what is and is not covered.  Read the full article.

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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Flood insurance costs are rising down the Jersey Shore

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.
 * * * * * *
The New York Times reports that New Jersey's shore residents hit hard by Hurricane Sandy are facing a new problem- the rising cost of flood insurance.

Uncertainty about the future cost of flood protection is hampering the housing recovery in coastal communities hit hardest by Hurricane Sandy.

Premiums for the National Flood Insurance Program are certain to rise in coming years as a result of a Congressional mandate to bring them into line with real risk levels. The question is, by how much?

The Federal Emergency Management Agency is updating flood hazard maps to assess present-day risks, but until the redrawn maps are finalized, and the rates revised, neither homeowners nor mortgage lenders can accurately estimate the affordability of future premiums.

FEMA is also phasing out the subsidized rates granted to policyholders with homes built before local flood maps were first drawn. The agency estimates that about 20 percent of the 5.5 million policyholders receive these subsidies.

The unknowns around flood insurance rates could pose a problem for lenders, especially because, under the terms of the Dodd-Frank Act, they must document a borrower’s ability to repay a mortgage over the life of the loan, said Doug Rossbach, a vice president in charge of the mortgage banking practice at North Highland, a global consulting firm based in Atlanta. “Premiums could go skyrocketing,” he said. “The lender is in a pretty tough spot. How can the lender know if the borrower can afford to stay in the property, or spend the money to elevate that property?”

Once the maps are revised, some coastal property owners who don’t pay for flood insurance may have to. Lenders haven’t necessarily recognized that yet, as Mr. Rossbach recently discovered when he applied to refinance his house in Rumson, N.J. His house flooded during Sandy, and although he hadn’t been in a flood zone before, preliminary map revisions show that he will be. The lender “never asked me about flood insurance,” he said, “because the effective maps don’t show me in a flood zone. But lenders are beginning to pick up on this, and it’s going to make it tougher for the consumer.”

Read more . . . .

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if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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Flood insurance program a mess

How would you like to live in home that is prone to flooding? How would you like to have it be “flooded 34 times since 1978?” Well, there is such a home, and there are more like it.

“In Wilkinson County, Miss., a home has been flooded 34 times since 1978.

“Extraordinary as the damage may be, even more extraordinary is that an insurer has paid claims every time, required no flood proofing, never raised premiums after a claim and vowed to continue insuring the house. Forever.

“The home's value is $69,900. Yet the total insurance payments are nearly 10 times that: $663,000.

“It's no surprise that the insurer faces huge financial problems.

“The insurer? The federal government.”

Billions of dollars have been paid to the owners of similar homes across the country and there is no end in sight.

Other insurers for casualties and liability are certain that the premiums collected exceed the cost of claims. But not with the federal government in charge.

“Instead it's running deeply in the red. A major reason, a USA TODAY review finds, is that the program has paid people to rebuild over and over in the nation's worst flood zones while also discounting insurance rates by up to $1 billion a year for flood-prone properties.”

In New Jersey, claim histories are not so great either.

As reported in the Asbury Park Press,

“For every dollar the National Flood Insurance Program has doled out since 1978 to repair flooded homes and businesses in New Jersey, 68 cents has been spent to repair properties that have been flooded more than once. Nearly one in seven of those properties is in Monmouth or Ocean counties.”

So, what do you think should be done? It seems that it makes sense that homes that are repeatedly subjected to floods are built where they shouldn’t be. Rather than continuing to pay claims, maybe the homeowners should be bought-out.

What do you think?

Read the entire USA Today report here.

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if you have questions about what you see here, contact

Stephen M. Flatow

Vested Title Inc.

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Jersey City, NJ 07306

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More Monmouth County, NJ residents need flood insurance

Coastal residents of Monmouth County, New Jersey are facing a deadline for the purchase of homeowner's flood insurance.

The Asbury Press is reporting, "On Sept. 25, the Federal Emergency Management Administration's revised flood zone maps for 12 coastal Monmouth County municipalities become permanent."

Flood insurance has long been a staple of life at the Jersey Shore but the revised maps, based on laser technology, expand the "areas that have a 1 percent annual chance of severe flooding."

The impact on Monmouth County residents is substantial.

FEMA'S revised maps have expanded the Bayshore's municipal flood zone areas, adding an estimated 4,300 property owners to the Raritan Bay-Bayshore zone. The new maps, released March 2008, add 1,820 homes in Middletown; 1,810 homes in Keansburg; 640 homes in Hazlet; and 15 homes in Union Beach.

Most homeowners, as a condition of their federally insured mortgage, now will need flood insurance.

Combined, the added policies will cost coastal Monmouth residents hundreds of thousands of dollars.

One planning expert said such mandatory flood insurance will bring, aside from premium payments, other secondary economic costs. "It certainly will result in higher monthly housing costs," said James W. Hughes, Dean of the Edward J. Bloustein School of Public Planning & Policy, Rutgers University. "Even if the(operating) price stays the same, you've got an additional monthly insurance premium that you have to pay."

Not all the news is bad.

Bayshore residents can reduce their initial flood insurance cost, said FEMA executives, by purchasing a "preferred risk policy" before the maps take effect. PRPs are only issued for homes not currently in the flood hazard area.

Property owners are then locked into the policy rated by an insurance agent using a low risk zone upon renewal. The PRP rate remains in effect until the policy's first renewal date.

Flood insurance has long been required for federally related mortgage loans--just about all mortgages written in the United States--since the inception of flood insurance. It's a necessary evil, saving homeowners from many tens of thousands of dollars in out of pocket losses when floods strike.

Read the Asbury Park Press stories, FEMA maps expand zones and Time to buy insurance is now. For more about the go to http://www.floodsmart.gov/floodsmart/

For your next title order,
or if you have questions about what you see here,
contact Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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