Fate Of Mortgages In Damaged Areas Unclear
Consumer Affairs brings up the new bankruptcy rules that involve natural disasters. "Under the new bankruptcy legislation, homeowners who have refinanced may be liable for the full cost of their loans if they waived their protections when signing their new agreements."
"Such was the fate of many homeowners after a series of landslides in Laguna Beach, California, in June of 2005, the Los Angeles Times reported. It remains to be seen how this will affect bankruptcy or relief petitions in the wake of Katrina."
Insurer AIG has this to say about mortgages in the storm damaged areas. "Mortgage insurer AIG United Guaranty laid out guidelines Wednesday for how it will insure its clients with borrowers in areas affected by Hurricane Katrina. It did not have figures available, but many mortgages could be in potential jeopardy."
AIG insures 4,145 mortgages in Alabama; 7,131 in Louisiana, and 1,644 in Mississippi, a spokeswoman said. AIG said it wanted lenders to make arrangements with borrowers with severe property damage or temporary job losses to prevent foreclosure."
"Chris Goodwin, vice president of Loss Management (said), 'In working with lenders whose customers have been affected, we are prepared to accept a range of reasonable solutions where mortgage payment is concerned.'"