Austin Texas – When Short Sale clients Dan and Barb bought a retirement home with a conventional loan without the assistance of a buyer agent, they thought they were getting the deal of the century: a small 1 story, three-bedroom bungalow fixer-upper in a wooded neighborhood surrounded by scenic creeks for only $188,000.
"I would never have bought this home if I would have known the flood insurance could go to $5,500 a year". "It's really put me in a dilemma," Dan, age 68, said of the premium spike for flood insurance on his Austin Texas home. "I didn't know what to do."
Throughout the lake, river, and creek infested Austin metro, homeowners now face similar sticker shocks, the result of new federal law reforms to overhaul the National Flood Insurance Program, which serves some 5.5 million policyholders nationwide and is now over $24 billion in debt after decades of catastrophic storms, including hurricanes Katrina, Isabel and Sandy. The problem has also been compounded by the Federal Emergency Management Agency's (FEMA) ongoing update of flood insurance maps, which have and will expose many more property owners to paying flood insurance for the first time. These home owners will get their surprise via a letter either from FEMA or from their lender informing them they are now in a flood zone and required to carry very costly flood insurance policies per their mortgage agreement.
So what is the problem in a nut-shell? The federal government got involved in flood insurance in 1968, when Congress passed a law to start a large-scale subsidy program that could offer more affordable flood insurance rates than the private market, which couldn't handle the mass of claims that occur after large storms or floods. However, now the federal government wants out of the subsidy system they created and cost them big-time and is asking the home owner to start paying market value for their flood insurance. So flood insurance will continue to rise as the government slowly gets out of this business altogether. The result? More home owners will find themselves in Dan and Barbs shoes (or worse) and thus more Short Sales and Foreclosures will occur do to this dilemma.
The good news is there is absolutely no reason for you to lose your home to foreclosure. You have many alternatives including Short Sale, Mortgage Modification, and Deed-in-Lieu of Foreclosure. And the U.S. government does not want you to be foreclosed on either. So much so that the U.S. Treasury Department started a cash incentive program in 2009, also known as HAFA (Home Affordable Foreclosure Alternatives) that provides approximately a $3,000 cash incentive to the short selling borrower/seller upon the successful completion of their short sale. The government rolled this incentive program out in 2009 because about 70% of homeowners that would-could qualify to do a Short Sale don’t even try (they just let their home go to foreclosure and destroy their credit when doing that is completely unnecessary). So if you have missed a mortgage payment(s) or are about to miss your first mortgage payment; call a real estate agent that specializes in Short Sale. Don’t wait; you have a very limited amount of time to act (especially if you live in Texas).
Thinking about doing a Bank Short Sale to avoid Foreclosure?
I can help you short sale your property and get back on your feet. Send me an e-mail at GeorgeKiefer@gmail.com and I will contact you for a free consultation. When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me direct at (512) 970-0709.
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