Homeownership: the American dream. Yet, this dream is becoming more unreachable for many as each day passes.
For example, the mortgage mess--a major factor in the economic downturn of this country--has taken its toll on the real estate market. While some steps are slowly being taken to right wrongs that have occurred http://www.examiner.com/x-10548-Hartford-Special-Interests-Examiner~y2010m2d16-Countrywide-settlement-checks-due-to-hit-Connecticut, not all is well.
“During 2008, people lost their homes in unprecedented numbers....‘As the recession deepened in the first three months of this year, foreclosures and seriously delinquent home loans in Connecticut jumped above the rate of one mortgage of every 20 for the first time in at least 30 years. The state had 28,285 residential mortgages either in foreclosure or 90 days past due….’” http://www.examiner.com/x-10548-Hartford-Special-Interests-Examiner~y2009m5d31-Animals-in-crisis
Bad actors are turning up left and right. Now, the Securities and Exchange Commission (SEC) has jumped into the fray, with a lawsuit filed on Friday against Goldman Sacs. The SEC is levying charges that the Wall Street giant “created and sold a mortgage investment that was secretly intended to fail. The move was the first time that regulators had taken action against a Wall Street deal that helped investors capitalize on the collapse of the housing market.” http://www.nytimes.com/2010/04/17/business/17goldman.html?th&emc=th
In response to such problems, the availability of loans is tightening up, leaving many buyers with fewer options. This, in Connecticut, which “as a state…ranks in the top ten among the 50 states when it comes to lack of affordable rental housing” transforms the American dream into an urgent need. http://www.examiner.com/x-10548-Hartford-Special-Interests-Examiner~y2009m5d26-Affordable-housing-in-Connecticut
The Federal Emergency Management Agency (FEMA) has jurisdiction over the NFIP as floods “are one of the most common hazards in the United States. Flood effects can be local, impacting a neighborhood or community, or very large, affecting entire river basins and multiple states.” http://www.fema.gov/hazard/flood/info.shtm
The most recent information posted on FEMA’s website is from the March 28, 2010 expiration of the NFIP authorization (the periodic legislating of federal programs, paving the way for subsequent funding http://www.examiner.com/x-10548-Hartford-Special-Interests-Examiner~y2009m8d16-Civics-101-how-are-laws-made.)
“The NFIP’s authorization has expired – March 28, 2010 – at midnight. Congress did not act to extend the NFIP’s authorization before the deadline, so the Program will not be allowed to operate…” http://www.fema.gov/business/nfip/
Since the expiration of the program, federal disasters have been declared by FEMA following flooding in New Jersey, Massachusetts, Rhode Island, and West Virginia. http://www.fema.gov/index.shtm As of today, 41 locations are considered to be flooding, with another 59 near flood stage. http://www.weather.gov/ahps/ Every state in the nation is at risk from flooding; no state is immune. http://www.fema.gov/hazard/flood/index.shtm
Without government backing for the NFIP, this federally-administered flood insurance program is not available, therefore leaving homeowners at risk, as well as suspending myriad real estate transactions nationwide for otherwise qualified buyers.
This is especially problematic as the lapse is occurring in conjunction with an expansion of flood zones.
In Connecticut, FEMA ignited a controversy last year as they enlarged the areas considered vulnerable to flooding, adding large portion of the shoreline to their new flood maps. http://www.examiner.com/x-10548-Hartford-Special-Interests-Examiner~y2009m9d6-FEMA-sets-off-rumbling-across-shoreline-Connecticut-and-parts-of-NY-and-NJ If a property is designated as flood-prone, flood insurance is often mandatory. “…FEMA requires flood insurance across the country, obligating lenders insured by the Federal Deposit Insurance Corporation (FDIC) to require policies be carried by their borrowers.”
“Homes and buildings in high-risk flood areas with mortgages from federally regulated or insured lenders are required to have flood insurance. These areas have a 1% or greater chance of flooding in any given year, which is equivalent to a 26% chance of flooding during a 30-year mortgage…. [Additionally a] lender can require flood insurance, even if it is not federally required.” http://www.floodsmart.gov/floodsmart/pages/about/when_insurance_is_required.jsp
Congress is being pressed by the National Association of Realtors to take appropriate action immediately on the NFIP. While “Fannie Mae and Freddie Mac [two government-backed entities designed to support the financial aspect of the housing market] have agreed to temporarily accept mortgages on homes while flood insurance is not available as long as certain conditions are met.” http://www.houselogic.com/news/articles/nar-presses-congress-flood-insurance-renewal/