Hurricane Sandy devastated the coastal area homes of many Connecticut residents. In some cases, tidal waves did more than 50 percent damage to the value of homes while raising the price of flood insurance. In addition, a federal revamping of flood maps of coastal areas nationwide has made even obtaining flood insurance for some homeowners difficult.
The Federal Emergency Management Agency routinely adjusts predicted flood zones. In anticipation of climate change and storms like Hurricane Sandy, FEMA has made plans to classify tens of thousands of homes throughout the Northwest, Gulf Coast and West Coast as homes in flood plains by 2016. The affect on homeowners is a drastic increase in the cost of flood insurance.
FEMA has made compliance with the new flood maps optional. However, non-compliant homes will not be able to obtain insurance from the National Flood Insurance Program, which provides flood insurance policies for over 5 million homes. FEMA is estimating that waves from Long Island Sound could rise as much as 5 feet from previous estimations. In order to qualify for federal insurance, coastal homes in Connecticut may be forced to raise their homes several feet.
Legal and financial issues for homeowners
The remapping of FEMA flood zones can bring about several legal consequences for Connecticut homeowners. A home with a mortgage greater than the value of the home is financially “underwater,” an unfortunately apt description for some coastal homes. Raising a home in order to qualify for the National Flood Insurance Program can be complicated and expensive. For example, Bloomberg News recently reported on the Ekvalls of Greenwich, Connecticut. They were forced to raise their home 6.5 feet above sea level at a total cost of $300,000 dollars. Had they not done so, they would have faced annual flood insurance costs of $5,500. With the house raised, their flood insurance will lower to less than $500 per year.
Unfortunately, such renovations may be unfeasible for some homeowners. In such a situation, homeowners may wish to sell their house.
Short sales and foreclosures
In a short sale, the mortgage lender and the homeowner negotiate to allow the bank to repossess the home for less than is owed on the mortgage. In a foreclosure, the bank repossess the home of a debtor who is unable to make payments on the home.
Both processes can be lengthy and complicated. However, homeowners who are facing costly renovations or increased flood insurance may have no other choice. Fortunately, an experienced real estate attorney can help guide homeowners through the process in order that they may be able to get out from an unaffordable home or mortgage and begin again. Connecticut homeowners facing such a difficult situation should contact an experienced real estate attorney to discuss their options.