What Effect Will the Fires Have on the Housing Market?
November 1, 2007
I received a comment and some questions from my blog of October 25, 2007.
The comment was directed toward how the loss of property would effect the housing market. Obviously there are a number of individuals and families that are in need of housing. The temporary shelters are being closed and folks are needing to find housing until they figure out their future plans. It is possible that in the short term there will be a demand for rental housing. Most insurance policies do include coverage for temporary housing during a reasonable rebuilding period.
A more challenging question concerned the issue of the mortgages that were against the properties that now are mere ashes. When you purchase a home, one of the lender's requirements is for enough fire insurance to cover the amount of the loan. The lender is added to the policy and has first rights to any settlement monies. This should hopefully pay off the entire loan leaving the property owner with a lot and no mortgage debt. The homeowner then will need to obtain a construction loan in order to rebuild. If the choice is to purchase a resale property, then a new loan would need to be obtained.
It will be some time before all the paperwork can be processed. I do know that after the 2003 fires, insurance companies were relatively prompt in providing funds for temporary housing for the victims. Whether or not the federal government steps in with temporary housing (FEMA Trailers) remains to be seen.
For all of us who were not victims of this disaster, it would be prudent to check our homeowners policies and familiarize ourselves with our coverage.
I received a comment and some questions from my blog of October 25, 2007.
The comment was directed toward how the loss of property would effect the housing market. Obviously there are a number of individuals and families that are in need of housing. The temporary shelters are being closed and folks are needing to find housing until they figure out their future plans. It is possible that in the short term there will be a demand for rental housing. Most insurance policies do include coverage for temporary housing during a reasonable rebuilding period.
A more challenging question concerned the issue of the mortgages that were against the properties that now are mere ashes. When you purchase a home, one of the lender's requirements is for enough fire insurance to cover the amount of the loan. The lender is added to the policy and has first rights to any settlement monies. This should hopefully pay off the entire loan leaving the property owner with a lot and no mortgage debt. The homeowner then will need to obtain a construction loan in order to rebuild. If the choice is to purchase a resale property, then a new loan would need to be obtained.
It will be some time before all the paperwork can be processed. I do know that after the 2003 fires, insurance companies were relatively prompt in providing funds for temporary housing for the victims. Whether or not the federal government steps in with temporary housing (FEMA Trailers) remains to be seen.
For all of us who were not victims of this disaster, it would be prudent to check our homeowners policies and familiarize ourselves with our coverage.
posted by shirley harry at 12:54 PM
0 Comments:
Post a Comment
<< Home