FLOOD03666 - Laserfiche WebLink

Home Browse Search

A survey conducted by the Savings and Loan League of Colorado in regard to mortgaged homes destroyed or damaged by the floods re- vealed that 13 of the 34 associations in the Denver metropolitan area held mortgages on damaged or destroyed homes. The final loss to the associations will probably approach $5,000,000 since mortgages on these homes will be or have been cancelled, or an association takes over the property and cancels the remaining indebtedness. In this connection, in cases of total loss, the associations reduced the mortgage or indebtedness to the value of the land. For example, a $10,000 mortgage which covered an $8,000 home and a $2,000 plot of land would be reduced to $2,000; the monthly payment would be reduced where the owner wished to retain the plot, and the associations would take title to a plot and cancel the indebtedness where the owner did not wish to retain the land. In cases of partial loss, mortgage payments were deferred from 90 days to six months. Occasionally, where the Small Business Administration was involved with repair loans, the associations reduced the amount of the mortgage by the amount of the S.B.A. loan or rehabilitation cost. Insurance Commissioner In regard to actions of the insurance industry after the flood waters receded, the Insurance Commissioner reported that, almost with- out exception, life insurance companies deferred premium payments due from persons whose property had been damaged or destroyed by the floods. These companies also arranged immediate loans of cash values without the usual home office delays caused by red tape, and most of the mort- gage agencies declared a moratorium on home mortgage payments. In addition, casualty insurance companies brought in their top adjusters to assist homeowners insured against damages from hail, fire, etc., and many adjusters provided assessment of damages to noninsured homeowners. As far as flood insurance coverage is concerned, almost 100 per cent of the residences damaged were not covered. However, almost all passenger vehicles were covered with the comprehensive portion of automobile insurance. Similarly, many commercial vehicles were covered by insurance and, for the most part, house trailers were covered by the extension of the automobile comprehensive coverage. Some other house trailers were covered by blanket mortgage insurance. Generally, com- mercial buildings were not covered by insurance except for those build- ings owned by national firms, such as May D&F, that had insurance covering the contents of their many buildings across the country. The Insurance Commissioner believes that there may be flood in- surance in the future for property owners who cannot now purchase protection against this risk. The National Association of Insurance Commissioners has appointed a hurricane and flood committee to consider the feasibility of optional or mandatory flood insurance coverage. Federal legislation would be necessary in order to allow the insurance industry to establish flood insurance protection, either to provide a temporary subsidy to an insurance pool until it contains a given amount, similar to subsidies provided F.D.I.C. and F.H.A. pools, or to prevent the pool's participating companies from being subjected to antitrust suits, or both. - 10 -