Posted on 09/06/2009 12:45:57 PM PDT by Chet 99
Sunday, September 06, 2009
The Federal Emergency Management Agency’s policy requiring flood insurance in flood plains is meant to protect life and property. But in East Waco, it may cost a single mom her home.
Charrie Rollins, 36, is facing foreclosure on the $81,000 brick home she bought three years ago on Bowers Lane near Interstate 35. She says she has fallen behind on her payments because she can’t afford the flood insurance her lender began requiring after FEMA determined last summer that her home was in a flood plain.
FEMA last September reclassified the area east of Hillsboro Drive to be in the 100-year flood plain, which means it has a 1 percent chance of flooding in a given year. The area, which extends east past Interstate 35 into Bellmead, includes more than 30 small homes as well as Toliver Chapel Baptist Church.
The map changes were advertised in newspaper public notices before they became official a year ago, but few outside government circles took notice. Rollins said she didn’t know she was in a flood plain until her mortgage company informed her this January. Under FEMA rules, companies that lend to homeowners in flood plains must require them to have flood insurance.
Rollins said that requirement set in motion a vicious cycle that has left her $2,600 behind on her payments to her mortgage company, even though she has continued to pay her customary principal and interest payment of $459 a month.
“One person told me I should declare bankruptcy, but I don’t want to do that,” she said. “It’s a big weight on my shoulders. No one wants to fear that they’re going into foreclosure.”
Rollins said that after learning she was in a flood plain she attempted to get private flood insurance but did not have it as of May.
That month, Rollins’ mortgage company created an escrow and force-placed the flood insurance policy on her at a rate of $158 a month, her paperwork shows. Rollins said her escrow payments also now included six months of back payments on flood insurance to last November, plus property taxes and hazard insurance, which she had always paid on her own. Her bill for May was $1,294.
Foreclosure looms
Rollins said she couldn’t afford those charges based on her take-home pay of $1,647 a month, so the bills and late fees have continued to accumulate. The company began threatening to foreclose on her home in June but has not yet done so.
Rollins’ lender, American Home Mortgage Servicing Inc., of Irving, Texas, could not be reached to verify her claims that she was retroactively charged for flood insurance.
AHMSI was formed to collect debts after the 2007 bankruptcy and liquidation of the subprime mortgage giant American Home Mortgage Investments. According to news reports, it is expected to receive $1.3 billion from the federal anti-foreclosure program called Making Home Affordable.
AHMSI has no publicly listed phone number.
But Rollins’ counselor at NeighborWorks, a nonprofit homeownership center in Waco, said he has talked with the company, and Rollins’ story seems to check out.
“We’ve been going around and around with the mortgage company for months,” homeownership planner Ruben Andrade said. “The mortgage company was not willing to work with her at all.
“Unfortunately, in her case, she’s on a fixed income. Her budget does not allow for an increase in her monthly mortgage, and it’s placed her in a position to become delinquent. Besides her going and getting a part-time job, she’s not going to be able to make it. I would say they’re probably going to foreclose on her. How soon is unpredictable.”
Andrade has urged Rollins to purchase her own flood insurance policy, which he said costs about a third as much as the force-placed insurance. But Rollins said no local companies will sell her the insurance without getting an engineer to study the house and write a certificate of elevation, which costs about $600.
County Commissioner Lester Gibson, who heard about Rollins’ plight from a pastor, raised the funds for the certificate at a recent meeting of his weekly public-affairs forum, the Fred Batts Leadership Luncheon. Last week, she hired the engineer and is waiting for the certificate.
Gibson said he will keep an eye on Rollins’ situation and try to find her help.
“I would hate to see her lose her home,” he said. “If that’s going to happen, maybe the community can come to her aid.”
Other owners affected
Gibson said he has heard from other property owners in the area that have had to purchase flood insurance, including Toliver Chapel.
City Engineer Mark Hines, who is the city’s official flood plain administrator, said he has heard the same from some homeowners in a small area of East Waco around Spring Street that was also added to the flood-plain map.
Cities and homeowners were given the chance to contest the new flood-plain lines between March and June 2008.
But Hines said he saw no grounds to appeal. He said the old flood-plain maps date back to the 1970s. Since then, three-dimensional aerial photography has allowed FEMA surveyors to make maps of much greater precision, which explains the changes, he said.
“It does sound kind of heartless, but basically, you’re either in or you’re out of the flood plain,” he said. “In this case, better technology may have made it worse for some homeowners.”
Andrade said Rollins’ situation is a “strange case,” but other mortgage holders may be affected too.
“It’s really been a hassle and a mess,” he said. “In all honesty, I wouldn’t be surprised if there are others who still have mortgages who are accumulating debt from force-placed insurance.”
But he said Rollins is doing everything she can do at this point.
“I have to give her a thumbs up in being very aggressive in trying to do her research,” he said. “We’ve coached her along and educated her, and I think she’s got a good head on her shoulders.”
jbsmith@wacotrib.com
ya mean banks change the rules anytime they want?? who woulda imagined that
What a drain of money that will continue to be YEARS from now. We should have abandoned it. It's pouring money in to the toilet.
Seems a simple breach of contract to me.
She contracted to pay a given amount, and the mortgage company UNILATERALLY attempted to change the contract.
No, FEMA changed the rules. The bank is requiring flood coverage because FEMA changed the flood plain. No flood insurance, no reimbursement for the bank from FEMA if there is a flood.
I thought Texas was having a “severe” drought.
I thought flood plain designation was the responsibility of the Corps of Engineers, not FEMA. Something sounds fishy.
Given all the detail, why the hell did she purchase an $80,000 house?
Contracts are sacred. Unless there was some clause in the loan that was open-ended when it comes to FEMA rules, the lady doesn’t owe the bank a thing on that additional insurance.
Not a good thing for this person and it could probably handled better.
Someone must have missed this when the loan was originated. But FEMA also redraws flood maps and a once non flood plain property, can all of a sudden be in a flood plain with a updated map.
But, this is one of these things that lenders must do.
If not, they are the bad guys when that flood hits and the home are destroyed. “You nasty lender never told us this home was in a flood plain; I don't want to pay my loan back now that a flood destroyed my home”.
In Iowa many people were wanting to sue lenders for that very situation, from last years floods.
This is just plain evil!
“no reimbursement for the bank from FEMA if there is a flood.”
You mean no reimbursement from the tax payer.
Banks are very aware of flood risks before giving a loan. They just don’t want to accept the risk of their business decisions.
Not quite, guaranteed to flood at least that high in any 100 year period ~ so it could flood every year. There’s no percentage thing in it.
$80,000.00 doesn’t buy much!
Robbery.
$158 per month, times 12 months per year, times (on average) one house replacement every 100 years, works out to nearly $190,000 to protect against an $81,000 risk. And probably not an $81,000 risk - any flood wouldn't necessarily totally ruin the house.
With that kind of income, a small apartment, no cell phone, and no high speed internet. Lots of room left in the budge.
She contracted to pay a given amount of principal and interest providing she signed documents for a fixed rate loan (which I'm going to assume she did). Taxes and insurance are not fixed and usually go up on an annual basis.
Flood maps underwent a major revision a few years ago and many properties which previously were in either an undesignated area or in a non-flood area were found to be in the hundred year flood plain.
The real question here is whether or not the bank had a right to force federal flood insurance on the property owner AFTER they loaned her the money.
I bet they didn't. Some of these WaMu properties are just now being identified by the true owners of the mortgages so in the meantime the temporary custodians have been figuring out ways to steal.
I suspect something like that is going on here.
Why on earth would you believe that the same does not apply to New Orleans?
You see, in New Orleans when a deadbeat like Ms. Rollins falls behind on her payments, the mortgage company will foreclose on their property.
People in New Richmond, OH (east of Cincinnati) have been flooded dozens of times. Each incident FEMA comes out and offers to buy their (ruined) houses at market value. Each time the residents refuse and the cycle repeats.
Why is FEMA bothering?
Say there was a flood tomorrow. The house disappeared from the face of the planet. The woman would still be labile for repaying the money she borrowed and used to purchase the house. If she had Flood Insurance she could pay off the amount owed and keep the rest of the insurance payout.
The contract isn’t on display here unfortunately. Having read numerous real estate contracts myself it wouldn’t surprise me if there was a ‘burn’ clause in there with the financier. The fine print and all that.
Deep Bureaush*t here. Let’s start with this whopper:
“But Rollins said no local companies will sell her the insurance without getting an engineer to study the house and write a certificate of elevation, which costs about $600.”
A friend, who has been a surveyor for over half a century, said surveyors, not engineers, issue Elevation Certificates.
What this woman needs is a lawyer. Retroactive charges are strictly ‘verboten’, even under the ObamaReich.
The bank didn’t change the mortgage. The bank purchased for her the required insurance she had to have. I’m sure her contract said that she would purchase all required insurance, and once the government made flood insurance a requirement, her contract would force her to buy it.
And I’m sure her contract allows the bank to buy insurance if she refuses, and I’m sure the contract allows them to escrow insurance payments.
I didn’t understand why the bank started escrowing her property tax and fire insurance, if she was previously paying it. Actually, I don’t understand why the bank wasn’t escrowing that all along, because they would want to make sure those were paid.
But that isn’t a long term additional cost for her, since in the end the escrow marginally collects only what she was paying before. There is the initial “funding” for the escrow, but that’s like having a forced savings account.
The bank changed no rules. FEMA reclassified and the bank is required to enforce the reclassification.
Good grief, she’s over a mile away from the river. That size flood would wipe out the entire city of Waco.
I’ve lived in my house for nearly my whole life and about 10 years ago they changed the 100 year flood plane to include us but not the houses across the street.
Charrie Rollins, a single mother of two, says she's facing foreclosure because she can't afford the flood insurance her lender requires since her East Waco home was redesignated as being in a 100-year flood plain. She is shown here at home with her sons Justin, 4, and J'Marcus, 11. (Duane A. Laverty photo)
IMHO, this is one of those “hard cases make bad law” stories.
Yes, I’m sad for the woman, however, I’m glad the feds are making folks in the flatlands get flood insurance...
For a while there I was getting tired of seeing flooded out families by the hundreds on the news, all seemingly “without insurance.” I’ve witnessed hundred year floods before...and they ain’t pretty.
Best thing to do is live on a hill...or not on a Midwest floodplain.
Actually, the very same thing has occurred all over the country over the last few years.
A friend of mine in Austin had a home he had owned for ten years right after he put the house on the market, FEMA designated it to be in the 100 year flood plain.
With that one move by FEMA, his property lost $50,000 in value.
In New Orleans, the very same thing has occurred with FEMA designating new areas as being in a 100 year flood zone.
In New Orleans there are areas where FEMA has designated one house as a +12 (to rebuild) and the house next door as a +3.
plane = plain
That’s what happens when the cat insists she needs more treats.
That's quite some time ago. Slick operators knew about the loss of information and simply cut off door locks, put in new ones, and rented the houses out to third parties pending some bank showing up with authority to take over the property.
This has seemed to me to be mostly a WaMu problem.
Who is she getting her flood insurance through? The Government?
We got cheaper coverage on our beach house, just under $1,500 a year.
Getting behind is no way to get ahead.
While parts of New Orleans may be below sea level, it floods less often then areas of Texas, the Midwest and South.
My quote was $300 a year, but then I dont live on a flood plain.
She can request an amendment to the flood map provided she can prove that her house elevation is 6” above the Base Flood Elevation. The person who administers the NFIP for her municipality or county should have the information available of how to do this.
I did this for quite a few homeowner’s back when worked for our local government.
Maybe they have an inordinate amount of saturation there. If this is legal, ex post facto, then it’s BS. If there is a clause that someone didn’t care to read? I don’t know. You say WaMu is the problem. Are they the loan originators?
I suspect the mortgage company has an out in the contract terms/conditions based upon the following:
.....
http://www.floodsmart.gov/floodsmart/pages/residential_coverage/homeowner.jsp
If your home is in a high-risk flood area and you have obtained a mortgage through a federally regulated or insured lender, you are required to purchase a flood insurance policy.
......
The only hiccup is that this redesignation occurred after the orginal purchase but I still bet that it is covered in the mortgage contract.
Ours has that nasty little Hurricane thingy
Damm. Thanks.
Sharp operators have taken advantage of the confusion and I get that feeling about this one.
*********************
Robbery.
$158 per month, times 12 months per year, times (on average) one house replacement every 100 years, works out to nearly $190,000 to protect against an $81,000 risk. And probably not an $81,000 risk - any flood wouldn't necessarily totally ruin the house.
Yes, it is robbery. I just looked - flood insurance in a high-risk area, building-only coverage for a house costing approx. $80K should cost about $58.00 per month, or $700.00 annually. Someone at that mortgage company needs to explain why the monthly escrow payment is so high.
I just hate banks.
When a risk they elected to accept turns out bad they seek a govt bailout.
When the average person gets behind they tighten the screws
When a Congress critter needs a favor they come through
Now New Orleans, when the flood prone areas flood it's OVER THE ROOF.
They don't move back!
I bet she’s white.
turns out the damn thing was in a flood plain.Ahh ... I've just got to ask, you didn't suspect this from the lay of the land?
The proximity to creeks, streams, rivers, a lake?
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