Tag Archives: homeowners’ insurance

Party at Your Place?

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photo by Devin Ewart

Realtor.com quoted me in Moved Out? Watch Out, Teens May Be Partying in Your Old Home. It opens,

Teenagers are always on the lookout for a house party—and there’s nothing better than a venue where it’s all but guaranteed that nobody’s parents will barge in and disrupt all their risky business: vacant homes!

That’s right, if you’ve moved out and planted a “for sale” sign on your lawn—or are waiting to move into a place under construction—it’s a sitting duck for young revelers to … revel in.

The latest victim of this fast-growing trend: a newly built home in El Dorado Hills, CA, where nearly 200 kids broke in and had a bacchanal before they were busted by the cops. According to the Sacramento Bee, most of the partygoers scattered to safety, but 14 were detained and cited for trespassing.

Sadly, by the time law enforcement arrived, the house had suffered enough damage to qualify as a felony. Cops noted numerous holes in walls, busted electronics, and other property devastation in the house (estimated to be worth around $500,000).

And this is hardly an isolated incident: Last month, a teen in nearby Ceres, CA, pulled up a “for sale” sign from the yard of an unoccupied house, then spread the word on social media to come on down—BYOB and BYOW (bring your own weed)—charging $10 a head for the 100 or so who showed up. The noise prompted neighbors to eventually call the cops, who suspect the “host” has made a habit of organizing fetes in abandoned homes.

All in all, such stories can haunt the dreams of homeowners who’ve moved out or are about to move in: Are hooligans holding beer pong tournaments in your abandoned (or soon to be occupied) living room every Saturday night? And if they do crack your granite countertops, who’s responsible for the damage?

The answer depends on your homeowner insurance, which rarely covers policyowners who aren’t living on the premises.

“Many homeowner policies won’t cover a home if it’s vacant,” warns David Reiss, research director at the Center for Urban Business Entrepreneurship at Brooklyn Law School. Funny right? But here’s the punch line: “Homeowners should also be concerned about injuries suffered by the teens. It is all too plausible that you will face a lawsuit if one of them gets hurt while partying at the house. This is true notwithstanding the fact that the teens had trespassed.”

In other words, if some drunk punk stumbles and falls off your balcony and lands on his noggin, it might be all on you.

Yet there are things you can do to head this problem off at the pass.

“Some insurance companies offer endorsements to your existing policy or altogether new insurance policies that cover vacant homes,” points out Reiss. “Some even offer special coverage for vandalism damages. It’s worth looking into them if your home will be vacant, even for a relatively short time.”

Docs You Need for A Mortgage

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photo by LaurMG

HSH.com quoted me in The Documents You Need To Apply for a Mortgage. It opens,

When it comes time to apply for a mortgage in 2016, you might be surprised at how much documentation you’ll need when applying for a home loan.

J.D. Crowe, president of Southeast Mortgage in Lawrenceville, Georgia, says most of the documentation should be familiar to you if you have applied for a mortgage loan in the last five years. If you’re new to the mortgage market this year, he says, this is all new.

The new Qualified Mortgage rules that took effect on January 10, 2014 make this paperwork even more important. To meet the new Qualified Mortgage rules, lenders will be even more diligent in collecting the paperwork that proves that you can afford your monthly mortgage payments.

David Reiss, professor of law at Brooklyn Law School in Brooklyn, N.Y., says that while the documentation requirements under the new Qualified Mortgage rules might come as a shock to those who haven’t applied for a mortgage since 2008, they are common-sense requirements for the most part.

“These are really common-sense rules,” Reiss says. “The new rules say that mortgage lenders are no longer allowed to throw out the common-sense standards of lending money during boom times, when they might be tempted to overlook long-term financial goals for quick profits. If the rules help that happen, they’ll be a good thing.”

Using Homeowners Insurance

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Univision quoted me in When to Use Your Home Insurance Policy (Cuándo Usar la Póliza de Seguro del Hogar). It opens,

It is not advisable to use your homeowners insurance every time something breaks. Find out why and learn when it’s the best time to file a claim and when to avoid it.

As explained by David Reiss, Professor and Research Director at Brooklyn Law School’s Center for Urban Business Entrepreneurship, it is important to think carefully about the consequences of making a claim for a small loss.

We leave you with several issues you should consider when deciding whether to file a claim.

Is the payment worth the effort?

Generally, the homeowner will be responsible for the first part of the loss in an amount equal to the deductible of the policy. “So if the policy has a $1,000 deductible, and there was a $1,500 loss, only $500 at most would be paid by the insurance company,” said the expert.

Many claims, canceled policy!

After a homeowner files multiple claims, many insurance companies may cancel a policy.  Reiss recommends that you determine how this would work beforehand.

Thanks to Ana Puello for assistance with the translation.

Monday’s Adjudication Roundup

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Risky Reverse Mortgages

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The Consumer Financial Protection Bureau released a report, Snapshot of Reverse Mortgage Complaints:  December 2011-December 2014. By way of background,

Reverse mortgages differ from other types of home loans in a few important ways. First, unlike traditional “forward” mortgages, reverse mortgages do not require borrower(s) to make monthly mortgage payments (though they must continue paying property taxes and homeowners’ insurance). Prospective reverse mortgage borrowers are required to undergo mandatory housing counseling before they sign for the loan. The loan proceeds are generally provided to the borrowers as lump-sum payouts, annuity-like monthly payments, or as lines of credit. The interest and fees on the mortgage are added to the loan balance each month. The total loan balance becomes due upon the death of the borrower(s), the sale of the home, or if the borrower(s) permanently move from the home. In addition, a payment deferral period may be available to some non-borrowing spouses following the borrowing spouse’s death. (3, footnotes omitted)

The CFPB concludes that

borrowers and their non-borrowing spouses who obtained reverse mortgages prior to August 4, 2014 may likely encounter difficulties in upcoming years similar to those described in this Snapshot, i.e., non-borrowing spouses seeking to retain ownership of their homes after the borrowing spouse dies. As a result, many of these consumers may need notification of and assistance in averting impending possible displacement should the non-borrowing spouse outlive his or her borrowing spouse.

For millions of older Americans, especially those without sufficient retirement reserves, tapping into accrued home equity could help them achieve economic security in later life. As the likelihood increases that older Americans will use their home equity to supplement their retirement income, it is essential that the terms, conditions and servicing of reverse mortgages be fair and transparent so that consumers can make informed decisions regarding their options. (16)
Reverse mortgages have a number of characteristics that would make them ripe for abuse: borrowers are elderly; borrowers have a hard time refinancing them; borrowers can negatively affect their spouses by entering into to them. Seems like a no brainer for the CFPB to pay close attention to this useful but risky product.