This is an amazing story on how the Federal Flood Insurance Program may be being played.
You cant blame people for trying to take the steps necessary to protect their biggest asset, their home, Cliff Merritt, president and chief executive of the small regional Delta Bank in Louisiana, told The (New Orleans) Times-Picayune.
Merritt has received 300 loan applications in the past two weeks, the newspaper reported Sunday.
Flood insurance for new mortgages takes immediate effect, whereas adding insurance later requires a 30-day waiting period, a rule mandated by the Federal Emergency Management Agency, which wants to provide incentive for homeowners to join the National Flood Insurance Program and avoid policies written during an immediate flood threat.
The fact that a government program might be opening the door for millions in claims because it is enacted immediately shows that the law of unintended consequences is not dead. The article continues on to state mortgage brokers are scared that if they push through these mortgages they will be liable for any damages the homes on the new mortgages sustain.
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