The latest developments

There’s a lot going on out there right now that home-owners and people entering the market should be aware of, so I wanted to give a bit of a rundown.

Flood insurance

Jim Hanrahan, senior loan officer of Westport Mortgage, provided an update on flood insurance.

Congress is slated to approve an “omnibus appropriations bill” that includes a provision delaying flood insurance premium increases on grandfathered properties having subsidized rates.

This provision would halt the 20% increase in premiums on grandfathered properties mandated by the Biggert-Waters Flood Insurance Reform Act that was enacted by Congress last year. The provision would mean that the Federal Emergency Management Agency (FEMA) would not begin phase-out of the subsidized flood insurance rates until this coming October 1.

There is an effort under way to pass the bipartisan, comprehensive Homeowner Flood Insurance Affordability Act (S. 1846) to provide relief to those in low-lying areas of the country.

The National Association of Realtors and other trade groups support this act, which would postpone all flood insurance increases for up to four years.

Today’s homebuyers have to pay the full-unsubsidized annual flood insurance premium at closing.

The proposed bill would not end this requirement, but would delay the “uncapped, point-of-sale” increases until an affordability study is completed and submitted by FEMA.

Smoke and carbon monoxide detectors

As of January 1, 2014, Public Act No. 13-272 went into effect in Connecticut.

This requires a seller prior to transferring title to real property (having a residential structure intended to be occupied by one or two families for which a building permit for occupancy was issued before October 1, 2005) to provide the buyer an affidavit certifying that the building permit for occupancy was issued on or after October 1, 1985, or that the residential structure is equipped with smoke detection and warning equipment and that such residential structure is equipped with carbon monoxide detection and warning equipment or does not pose a risk of carbon monoxide poisoning, because there isn’t a fuel-burning appliance, fireplace or attached garage.

Should a seller not comply with Public Act No. 13-272, the seller will have to credit the buyer $250 at closing.

RealtyTrac reported last week that homeowners with mortgages are increasingly becoming above water. The report released shows that 19% of all homes having mortgages were seriously underwater last month or borrowers owed at least 25% more on their mortgage than the home was worth. This is down from 26% of such homes last January.

The average home price across the country has improved almost 14% (year-over-year through October 2013), helping homeowners get above water on their mortgages, according to S&P Case-Shiller. Negative equity and an adverse event (illness, job loss, divorce, etc.) can cause foreclosure.

Although fewer homeowners are underwater, it does not mean the foreclosure crisis is over.

For millions of homeowners in a negative-equity position, foreclosure is the less costly option. The states having the highest percentage of seriously underwater homes in December were Florida, Illinois and Michigan.

The number of homeowners in a positive equity position in their homes (at least 50% equity in a home) increased from 16% in the third quarter of 2013 to 18% in the last quarter.


Mary Ann Clark is a Realtor with Coldwell Banker at 177 West Putnam Avenue in Greenwich. Questions or comments may be emailed to [email protected]   

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