Friday, July 25, 2014
Governor Patrick signed a new law yesterday that provides some potential relief to people who own homes in flood zones. Previously, lenders could and often did require homeowners to obtain flood insurance for the entire value of the property. This new law, however, gives the homeowner the option of obtaining flood insurance only in the outstanding amount of the mortgage. For example, if someone owns a home that's worth $200,000 but only owes $100,000, that person can opt to obtain only $100,000 in flood insurance. Of course, if the house is destroyed by flood, the homeowner's equity would vanish, but when the alternative is flood insurance premiums so high that people are driven to foreclosure, many will be willing to take that risk. More information about this new law is available in this story from the Patriot Ledger.