Heads up on FEMA and mortgages/flood insurance

[rainbow4321]

Just talked to my sis in Oklahoma...

Background: They bought their house outright back in the 80's but took out a mortgage loan 7 yrs ago. When they took out the mortgage, the mortgage company made them take out flood insurance on the entire house even though on record only their garage was in a "flood zone". Ok, fine, the garage could flood and that could get into the house. They started having to pay about $300 a year in flood insurance.


She gets a letter from the mortgage company this week telling her that her flood zone type had been RE-zoned and her even though she took out a $60,000 mortgage loan, her house is listed as being worth $160,000 and since flood insurance coverage doesn't come in $50,000 intervals, she has to have $200,000 worth of flood insurance coverage.

After phone calls to Travelers Insurance reps and the Army Corp of engineers, she found out from her insurance rep that *FEMA* is behind the flood zone redistricting. They are going in and doing massive changes in rezoning places which in turn is then making insurance companies JUMP at the chance of upping people's flood insurance.

The Corp person initially told her that according to thier records, she was still in the same zone and he said for $55 he could write her letter to submit. Her relieved feeling only lasted a few hours because the Corp guy then called her back and said he was "wrong"..she was in the "new zone".

So my sis now will owe $1200/year for flood insurance, and according to the insurance rep, homeowners may very well see their flood insurance premiums triple and per the rep: "I could see people potentially losing their homes over this".

Home owners do have an option of having a land evaluator come out to do their own assessment but that is about a $300 charge and even then "there is a chance that this independent evaluation will not be accepted".

For any of you homeowners, you all may want to keep an ear/eye out on any changes in your zoning or any hint that your home insurance company is thinking about making any premium changes.

I found this website of the different zone labels used by FEMA. Sis was initially in the "C" category, and was deemed by FEMA to now be in one of the "A" categories.

http://www.fema.gov/plan/prevent/floodplain/nfipkeywords/flood_zones.shtm


Just wanted to throw this out there, I know there is alot of other stuff going on in the headlines and here on DU, but this may be all happening under the media radar (not that that is hard to do since the MSM doesn't seem to multitask very well).

[elehhhhna]

1. please tell sis to shop for quotes.

[A Brand New World]

2. I'm trapped in the same situation. My land was re-evaluated by FEMA

and because of a tiny creek 1/2 mile away that has maybe at the most an inch of water in it I was put into the 1% chance of a flood. I was forced by my mortgage company to purchase flood insurance at $1200 a year. This is $400 more than my regular house insurance. And it covers the house only - no contents. And in response to #1, it does no good to shop around amongst insurance companies. Flood insurance rates are consistent from company to company.

[WinkyDink]

3. Thank you for this. My State Farm co. just dropped FI, so I now need a new agent.

I know it's FEMA, but SF was the middle-man.

[Cal Carpenter]

4. Yeah, it's all FEMA

She was lucky to only have to pay $300/yr before. My home is roughly the same value as hers and I've been paying more than $1500 a year. It's absurd. I must be in an 'A' category.

I understand the purpose of flood insurance but I have a problem with FEMA's districting and risk assessment. I don't live in a flood zone! There are about 5 houses on my street and another half-dozen a couple blocks away that are supposedly at risk of a flood from a small creek that is in a tunnel underground now. We are hoping that our risk will be deemed lower when they re-map our area, but we'll see..

She can shop around but as I understand it there won't be much variation from one company to the next, unless she gets a deal by having more than one kind of policy with a company (like auto, home and flood). The rates are somewhat fixed, I think.

[dixiegrrrrl]

5. Wow..now THAT's an impressive scam.

BOA is the "servicer" of our mortgage.
Last year they sent us a letter, saying we had to give them proof we had house insurance.
Ok, fair enough, I see why that is required.We have insurance since day one, local company.
But the letter went on to say if we did not give them proof,
THEY would automatically enroll us in THEIR insurance program ( huh? they have one?)
and automatically add the insurance fees to our mortgage payment.
WHOA!!!!!

It only took a phone call to get our insurer to send letter to BOA.

But, I could see the scam coming.
If they got us in "their" program, the rates would climb every 6 months.

I insisted on NO escrow and NO PPI and that WE would be responsible for property taxes and insurance, when we negotiated the mortgage.
Now that all the fraud is being exposed, I am very happy about that.

[rainbow4321]

6. Ding ding ding...sis used BOA also!!

And they at first tried to tell her that she didn't HAVE insurance, she had to get them the proof and they then backed down. But then this mess started!

[dixiegrrrrl]

7. Actually, BOA used her.

Pls. tell her to keep every copy of every communication from them, forever.
And to let her insurance agent or lawyer or somebody "talk" to them for her.
BOA are bullies and will come back again and again if they think you are a soft target.
I only communicate via my mortgage check, never call, never write them.
If I have to write, I will pay a lawyer to do it.
This is important because of the way BOA handles people.
And because of this:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x82502


Legal foreclosure process does not exist anymore. There is NO process for it, fraud permeates the entire system.

[BlueCheese]

8. Geez.

The interest on $60,000 would only be $2,700 or so annually at current interest rates. To have to pay $1,200 on top of that for flood insurance is like adding another 2% to the interest rate.