Insurance Archives

Flood Insurance Nightmare Update

FLOOD INSURANCE

Earlier this year, your real estate market was devastated with the implementation of the new flood insurance program. Previously, any home in a flood plain, that had a federally insured loan (most do), were required to have flood insurance, no exceptions,
Prior to January 2014, if a buyer got a federally back home loan and borrowed $125,000, their annual flood insurance policy premium is roughly 1% with an annual premium of $1,250 in addition to all of the other regular insurance, etc.
I first learned of this mess when my wife Beth and I had dinner with our next door neighbors, Heidi and Sean. When we met them at the restaurant on a Tuesday evening, they were furious, angry, frustrated and shocked.
Heidi and Sean were selling their previous home, had a contract on it and were scheduled to close on “this friday.” (we are in the restaurant on Tuesday evening.) Heidi just learned on Tuesday afternoon, 3 days before the scheduled closing that their buyer’s already approved loan was being cancelled due to the new flood insurance program that went into effect around January 10th or so.
Heidi and Sean’s annual flood insurance premium for their previous home they were selling was about $2,000.
Their new buyer’s flood insurance premium for the same house, jumped to $23,000 a Year because of the new changes. WOW!  No wonder their buyer’s loan was cancelled.
As you can see, there was no way they could sell their previous home and they rented it for the time being.
This rocked my local market big time and killed many pending real estate transactions and it also did the same for many communities across America.
UPDATE: with a lot of uproar from the real estate industry, our federal government recently passed a bill making some modifications to the federal flood insurance program.
What triggered the original fiasco is the turning off of federal government “subsidizing” flood insurance premiums. Insurance experts explained that the flood insurance premiums were never increased. The extreme price increase occurred when the federal government stopped the funding of flood insurance premiums.
The recently passed new modification to the federal flood insurance program postpones terminating federal assistance in 5 years.
This means for right now, you are ok, but only for 5 years, then the mess is triggered again.
TIP:  If you or your family members or loved ones own real estate in a flood plain, you might want to do some more homework on your local market and give serious consideration to selling now before the bomb drops in 5 years.
My personal concern about all of this flood plain and insurance changes is not so much for the investor, like me and you, but just think about the poor old homeowner. A homeowner who worked their whole life at a job, who considers their home an investment, and in one fell swoop, our federal government just causes these folks to go belly up.
What if these homeowners live on a pension and their flood insurance premium skyrockets from $1,200 a year to $12,000 annually. They are sunk. They can not sell because the value of their home has tanked.
And these homeowners are somebody’s mom and dad, aunt and uncle, brother, sister, and so on.
 
To Your Continued $uccess!
Mike

Flood Insurance Rate Hike from $3,000 to $23,000 Overnight!

BLINDSIDED! A TRUE NIGHTMARE KILLS a Real Estate Deal for my neighbor.

Last Tuesday, my next door neighbors invited me and Beth out for dinner at a new upscale restaurant in the “NuLu” part of downtown Louisville. (little did we know the University of Louisville basketball team had a game to play at the YUM center. Traffic was horrible.) They wanted to pick my brain about real estate investing and setting up Self Directed Roth IRAs for their two young sons.

This restaurant takes pride in all menu items are from local producers, including beer and wine. For the first time in over 25 years, I had myself an ice cold Pabst Blue Ribbon beer. It tasted pretty good, but not good enough for me to switch back from an occasional Bud Select here and there.

BLINDSIDED!

My next door neighbors, Heidi and Sean arrived and were visibly upset. They proceeded to tell me about the bad news they received that morning.

Heidi and Sean were selling their previous home, a nice home with a great view overlooking the Ohio River. After almost of year of trying to sell this unique river home, they finally got a buyer to purchase their previous home for approx. $225,000 AND their closing was scheduled to place this Friday.

Just 4 days before their scheduled closing Heidi gets a phone call reporting their buyers can not qualify now for their previously approved loan.

HERE’s WHY

Because of some new, hidden until now, federal regulations involving flood insurance and FEMA, the flood insurance on this property had increased almost 1,000% overnight!

Yes, when Heidi and Sean owned this home, their flood insurance was about $3,000 a year.

Get This!

Their Flood Insurance Premium is $23,000.

Absolutely Insane!

This can not be true!

What in the world is going on?

What about Real Estate Investors and Homeowners?

What gets my goat is how this new flood insurance pricing program “snuck up” on me, you, Heidi and Sean.

FYI, Heidi owns not one, but 3 Keller Williams offices. One in Louisville, another in northern Kentucky, and a third in southern Indiana.

Heidi is very involved in the real estate market and she was blindsided by this. Not a word in advance from our market industry watchdog groups. (I won’t name any group, but you know what I mean)

Here is the link from National Association of Realtors on this new flood insurance reform act

http://www.realtor.org/topics/national-flood-insurance-program-nfip

 

This is Part 1 – too much to write here.

Part 2 – some research reveals what is going on

Part 3 – new opportunities for creative investors

 

What are your thoughts?

New Tax Raises Mortgage Insurance Premiums

Mortgage Insurance Has Changed! 

I suspect those of you who are in the market for a mortgage are well aware of the new FHA mortgage insurance increase coming.  It’s only a quarter of a percent increase. ONLY?

Effective April 1, 2013, people who haven’t already gotten their FHA case numbers assigned will be subject to the new bigger and better mortgage insurance premium.  The increase will be between 10 and 15 basis points, depending on the loan.  This is all intended to make the FHA bigger and better – more secure. 

This is a Silent Tax. 

On the average, mortgage folks are looking at an increase of $30 to $40 per month.  This will make qualification more difficult for everyone.

The FHA has a number of other changes coming to a loan office near you.  They are all silent taxes on home owners.  The corker is the inability to drop mortgage insurance after you have paid the balance down to 78%.  In the good old days you could drop the mortgage insurance after you had paid down to the 78% of loan to value ratio.  Starting in June 3, 2012, mortgage insurance will be locked in FOREVER on most loans.

Mortgage insurance adds, let’s say, $175 per month to the monthly payment.  With the increase it will be over $200.  If you assume you will pay down to 78% of the principal in the first ten years, then you have twenty years left on your mortgage.  Whereas you could have dropped the mortgage insurance after the ten year period under the old policies, you now have to continue to pay it for the next twenty years.  That’s only about $42,000 more you will have to pay.  That’s a tax levied by the new Obama laws, plain and simple.  You are paying for all the screw-ups the government and banks have made and continue to make with affordable housing. 

If you are buying, do it now!

from GOLD Member Rod Owens

Landlord Held Liable in Tenant’s Dog Attack on Child

Landlords Better Watch This Closely and Take Action Now!

Kentucky led the nation on new law making Landlords the “Legal Owner” of their Tenant(s) Dogs. Now Pennsylvania follows in a close second.

Protect Yourself Now – Brand New Animal Application Forms Package

Will Your State Be Next?

ATTENTION LANDLORDS! Do NOT act like an ostrich. If you have tenants or if you are expecting tenants, you MUST take action on this now to “NIP IT IN THE BUD” as old Barney Fife screams. This will be coming to your town and your insurance company soon.

What are Your Comments about this new law and this article?

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Pennsylvania attorney Thomas J. Newell, who specializes in personal injury claims, announced that his firm has just obtained a $508,613.84 settlement from a landlord’s insurance carrier after a tenant’s pit bulls attacked a young boy.

The landlord allowed the tenant to keep the dogs.

According to Newell, the dogs jumped a three and a half foot fence into a homeowner’s yard and mauled the boy. He sustained serious injuries which required 17 surgeries.

His mother was also injured when she tried to help her son fend off the dogs. The family’s bills exceeded $500,000.

The landlord’s insurance company filed lawsuits in both federal and state courts arguing that, due to language in the policy, it could deny financial responsibility for the attack. However, Newell says he was successful in fighting those claims, and the insurance company ultimately conceded, agreeing to pay the victims the liability policy limits.

In July, an appellate court in Kentucky overruled a lower court’s decision that a landlord was not liable for injuries when a tenant’s dog bit someone across the street from a rental property.  Now, landlords in Kentucky may be viewed as “statutory owners” of tenants’ dogs simply by approving a pet request.

Protect Yourself Now – Brand New Animal Application Forms Package

Conversely, a Wisconsin court decided in March, 2011 that a landlord could not be held liable when a tenant’s pit bull attacked a neighbor, enforcing a longstanding policy in the state that landlords are only liable if the animal belongs to the landlord or is specifically under their control.  Judges found that being in control of the rental property is not enough to show control over the dog.

A number of cities and counties across the country, including some in Pennsylvania, have considered breed-specific legislation banning pit bulls and other breeds thought to have vicious propensities. Those laws have come under heavy opposition by animal rights advocates who say the individual dog, not the breed, determines whether the animal is a risk.

Newell  says he has recently represented a number of dog attack victims throughout Pennsylvania

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Protect Yourself Now – Brand New Animal Application Forms Package

Now you have seen this happen in Kentucky, Wisconsin, Ohio and this new law WILL SPREAD across America. Think about it. If you owned an insurance company, would this be a money saver for insurance companies.

Take action now.

Share this article, Email and forward to fellow investors and REIA Groups!

What are your thoughts?

ATTENTION LANDLORDS! You Are Now The Proud New Owner Of Your Tenants Dogs – 40 min FREE Webinar!

It’s Absolutely FREE!

Independent Contractors – How To Work with Them – Part 2

Independent Contractors are a critical component of every real estate professional.

Discover the Do’s and Don’ts to protect you, your family, and your business along with good solid business practices for tax time reporting.

This short video is Part 2

Click Here for Full Video/Article (Members Only)

New 1% Federal Bank Transaction Tax Proposed in House Bill HR-4646 – Email Your Congress Person Now

I Could Not Believe It.

Is This Really True?

It Is In The Planning Stages Now

The Federal Transaction Tax!

President Obama’s finance team and Nancy Pelosi are recommending a 1% transaction tax on all financial transactions.

It is true.

The bill is HR-4646 introduced by US Rep Peter deFazio D-Oregon and US Senator Tom Harkin D-Iowa.

Their plan is to sneak it in after the November election to keep it under the radar.
See what Nancy has to say about this wonderful idea!  http://tinyurl.com/24dn5ud

It’s only 1%! This is a 1% tax on all transactions to or from any financial institution i.e. Banks, Credit Unions, Mutual funds, Brokers, etc.

Any deposit you make will have a 1% tax charged.

Any withdrawal you make, 1% tax.

Any transfer within your account, a transfer to or from savings and checking, will have a 1% tax charged.

Any ATM transaction, withdrawal or deposit, 1% tax.

If your pay check or your Social Security is direct deposited, 1% tax.

If you carry a check to your bank to deposit, 1% tax.

If you take cash in to deposit, 1% tax.

If you receive any income from a bond or a dividend from stock, 1% tax.

Any Real Estate Transaction, 1% tax.

This is from the man who promised that if you make under $250,000 per year, you will not see one penny of new tax! Remember, he is completely honest and trustworthy.
Keep your eyes and ears open.

Folks, Nancy says this would be a minimal tax on the people, but 1 percent every time you pay a bill or make a deposit is not minimal. This would no doubt tax investment transactions as well as bank account transactions.

Excerpt from American Debt Relief

Contact Your U.S. Representative AND U.S. Senator Now

Here is the Link for fill-in-the-blank email to Your U.S. Representative

https://writerep.house.gov/writerep/welcome.shtml

 

 

 

Senate Supports Plan To Help Americans Buy Homes Again

The Senate on Thursday backed a measure to help bolster the housing market by making it easier for people to afford a home in wealthier neighborhoods.

The Senate voted 60-38 to attach the proposal to a spending bill that the chamber will consider later this year. It would restore the size of the loans the government buys or insures to a maximum of $729,500 from the previous cap of $625,500.

The cap, known as the “conforming loan limit,” determines the maximum size of loans the Federal Housing Administration and the government’s mortgage buyers, Fannie Mae and Freddie Mac, can buy or guarantee.

The higher loan limit expired at the end of Click Here for Full Video/Article (Members Only)

Storm Tips For Tenants and Your Properties

After having another Straight Line Wind Blast, Mike Butler shares tips for your tenants, insurance, restoring service quickly, along with do’s and don’ts.

The same set of storms that hit Indianapolis during the Sugar land concert causing the entire stage and rigging to crash into the audience killing 5 people.

 

 

 

Insurance Companies Plans with Bed Bugs Coverage

This article forwarded from Andrew Teutsch

Before reading this article, it sure would be awesome if Bed Bugs coverage could be included in Renter Insurance policies. A dream come true for apartment owners.

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As Bedbugs Multiply, New Insurance Plans Crop Up

Bedbugs are crawling the sheets in hotels, apartment buildings and college dormitories in surging numbers, which has spawned a new enterprise for insurance companies.

The tiny, reddish bugs, ranging to about 7 millimeters, or the size of Lincoln’s head on a penny, hide in dark places like vampires during the day and suck human blood at night. Unlike those other blood-thirsty parasites, head lice, bedbugs are extremely hard to wipe out once they infest, and the cost can be very high.

Infestations of any kind — bugs, rats or cockroaches —typically are excluded from commercial property insurance policies. The cost of eradicating pests was a maintenance expense, meaning it was not covered by insurance, up until recently.

Insurers, like most of us, didn’t want to get near the bugs.

But increasing pressure from lawmakers to require coverage, along with high demand from hoteliers and property owners to protect themselves from financial loss during an infestation, has created a new market.

Last month, bedbug insurance coverage was offered for the first time by two national brokerage firms, Aon Risk Solutions of Chicago and New York-based Willis North America; and also NSM Insurance Group of Conshohocken, Pa., an insurer.

“You’ve got legislators in the state of New York Assembly who are trying to make this mandatory that insurance companies do this,” said John Lafakis, senior vice president at Willis North America and program manager for the bed bug recovery insurance. “So we figured, ‘You know what, we’re going to beat everyone to the punch.'”

The brokerage firms are leaping into an area that has exploded after years when bedbugs were rarely reported, seemingly a forgotten annoyance from another era.

“Ten years ago it was considered a minor pest issue,” said Greg Gatti, a director at Aon Risk Solutions.

Bedbugs have grabbed headlines as more and more people report the telltale red welts after staying in hotels and living in apartment buildings.

Hotels could spend an average $600 to $800 per room to eradicate bedbugs, according to experts in Connecticut. That says nothing of lost income if an infestation becomes public knowledge — on websites such as bedbugregistry.com, or in the media.

Nutmeg State Plagued

The state office that fields questions from people asking about bedbugs, the Connecticut Agricultural Experiment Station in New Haven, had only two inquiries in 1996. Reports started coming in more regularly in 2003 in all major cities across the state, said Gale E. Ridge, an entomologist who specializes in bedbugs at the experiment station.

Ridge is also chairman of the Connecticut Coalition Against Bed Bugs, which brings together bug researchers, pest control services and other interested parties. She recorded more than 900 reports from people who suspected they had bedbugs in the fiscal year that ended June 30, 2010, and the numbers are double or triple that for the year that ended June 2011.

The insects are now in every corner of the state. “We have a very active population here,” Ridge said.

Bedbugs aren’t known to spread disease, but they can be an annoyance because of itchy welts from their bites and the loss of sleep they cause, according to the federal Centers for Disease Control and Prevention.

The Connecticut trend mirrors what is happening across the U.S. First, bedbug reports were coming out of larger urban areas. Now, they are more widespread, affecting every town in the state, Ridge said.

Occasionally, a person will mistake Eastern bat bugs (Cimex adjunctus) with bedbugs (Cimex lectularius), which are similar in the way they look and behave. Bat bugs typically signal that bats are living in the eaves or attic.

What’s the difference?

Bedbugs are small, flat parasites, retreating by day to hiding places in bed frames, floorboard cracks and other dark corners.

by MATTHEW STURDEVANT, The Hartford Courant