Hello, LOs!
Jennifer Zales, a real estate agent who lives in Tampa, currently pays $480 a year for flood insurance. Under the new federal flood insurance system, scheduled to take effect on Friday, Oct. 1, her rates will eventually reach $7,147 annually.
Zales told the New York Times that – unlike many – she can afford the higher rates, which the federal government say better reflect the actual risks from climate change than the prior 100-year-floodplain system.
But it will undoubtedly have an impact on prospective new homeowners, especially in Florida, where tens of thousands of properties are slated for a rise of more than $1,200 this year.
Some premiums in Florida will increase 10-fold over the next 20 years. (Federal law prohibits FEMA from raising any homeowner's flood insurance rates by more than 18% per year.)
For LOs and lenders, this means some borrowers won't qualify for mortgages as high as they would have prior to Oct. 1. Plus, FEMA hasn't disclosed rates for future years, which could make underwriting much trickier.
LOs – have you dealt with the issue of looming higher flood insurance rates? Please share your experience with me at jkleimann@housingwire.com.
Switching gears, yesterday I asked you all about the kinds of unexpected issues that end up delaying the closing. I'd like to share one response from an LO based out of North Carolina.
The closing day issues are rarely loan related and shouldn't be. With the 3 day disclosure rules and with a good company that has deadlines for files to be cleared to close, a loan issue coming up the day of closing is almost unheard of. I think only a really slack mortgage company can let this happen. The surprises I see are usually borrower related. I do see property issues that turn up if we're waiting on final inspections or if an agent hasn't submitted a termite inspection early in the process to know if we will need a structural letter or not. But nearly always, it's borrower related but even those issues don't come up the day of closing.
We are required to do verbal verifications of employment prior to closing and that can generate a surprise. I once got a verbal verification that confirmed that not only did the wife no longer work at her company but that she had been fired 3 weeks prior along with her boyfriend! For 3 weeks she had pretended to be going to work when in fact she was going to her boyfriend's house. I had to call the husband to tell him I had bad news and worse news. Not only was the loan not closing but by the way, your wife was fired 3 weeks ago and is hanging out with her boyfriend while you're at work. Not my best day in the industry.
I've had last minute soft pulls for undisclosed debts that we do right before closing to find out a borrower purchased two new cars and blew their debt ratio or signed on student loans for their children or co-signed a car loan for a brother. Or my favorite is when they go furniture shopping two weeks before closing and buy all new furniture on credit. I honestly can't think of a last minute issue on the day of closing that hasn't been avoidable and the responsibility of the borrower or the realtor. I did have an agent that showed up at the closing table with a contract addendum to reduce the purchase price that he 'forgot' to send to us or the closing attorney. He later stated he thought it would be Ok because it was a lower price not a higher one. Of course the closing package had to be re-drawn and the file had to go back to the underwriter.
Alright, that's all I've got. Hope you all have a great day!
James Kleimann
Managing Editor, HousingWire
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