Entries Tagged 'Home Insurance' ↓

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IndyMac is taking a pounding with it’s stock down 70 percent on the year and the prospects not looking much better. The irony is that one of their greatest pains is now piggyback loans.

You know, the piggyback loans that are were designed to save homeowners from having to pay mortgage insurance to protest lenders against bad loans. The insurance that would have taken the edge off the housing downturn. Yep, that insurance.

That is the problem with new theories in industry. Sometimes they do help make the world a better place, but sometimes they obliterate the logic that went into the conventional wisdom that kept an industry afloat and successful for so long. So innovation like the piggy back loans sure saved the consumer some money and gave the mortgage brokers a new revenue source.

However, there has been a good reason for the mortgage industry having buyers take out mortgage insurance policies instead of secondary loans. And that will be the true lesson for the coming few years.

“Delinquency trends in September rose sharply versus even August at IndyMac and for the industry,” he said, singling out “piggyback” loans, or loans taken out by those who don’t come up with a significant down payment and so take out a second loan to cover the purchase price. Some of these second-lien loans are proving worthless as home prices fall. “We’re writing them off,” Mr. Perry said.
He said the percentage of IndyMac’s loans to home builders that are “nonperforming” could rise to around 30% by the end of this year from about 10% as of Sept. 30. Builders have been hurt by plunging sales and prices amid a glut of homes on the market in some areas. via WSJ.com.

Ah, the joy of the politically based science of Global Warming and the greed of the insurance companies are going to create the perfect storm for any homeowner in a coastal region. In Australia there is a national panel recommending that insurance companies raise their premiums to protect against the potential of global warming impacting properties on the coast lines of the country.

“The science has hardened up enough and the awareness has hardened up enough, that probably we will see this year as a turning point in the debate over climate change and the need for it to be acknowledged in economic decision-making,” Dr Mallon said.

He said the financial impact of climate change on coastal communities is not likely to be gradual or to stretch over decades.

“It may occur at the point where an underwriter decides they are going to change a premium associated with a community and that can happen quite quickly - literally at the stroke of a pen,” Dr Mallon said. via MSN

So homeowners beware, once an insurance underwriter in the United States see’s that they can raise rates due to Global Warming, the floodgates will open with new and higher premiums to those already paying exorbitant rates already. And when the media gets ahold of the story it will be trumpeted far and wide.

After all of the talk about high home insurance in the states that can be hit be hurricanes, insurance costs in states that face sever damage by tornadoes and hail storms face insurance costs that are comparable with those in the hurricane zones. Forbes has put together a list of the most expensive places to purchase insurance and the results were a bit surprising to me.

With all the discussion the past couple of years about hurricanes and the property damage they cause, I expected this list to be comprised solely of the Gulf Coast and the East Coast. Instead Oklahoma, California, and Kansas are in the top 10 states with the highest insurance costs and Texas leads the way.

Top 10 States With The Highest Home Insurance

1. Texas – $1.362
2. Louisiana $1,074
3. Oklahoma – $991
4. Florida – $929
5. Mississippi – $907
6. District of Columbia – $894
7. California – $835
8. Kansas – $833
9. Colorado – $811
10. Alaska – $810