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The second-day story, with your help. Call Gazette reporter Adam Belz at (319) 398-8273 or e-mail him: adam.belz@gazcomm.com

Cracking the flood insurance nut

Did you live in the 100-year flood plain before the flood? Did you have a mortgage? Did you not have flood insurance?

If those three things are true of you, or you know someone who fits the criteria, please e-mail or call me. I’m at adam.belz@gazcomm.com or 319-398-8273.

Anyone can buy flood insurance, but the only ones required to have it are those who live in the 100-year flood plain and have a mortgage through a federally-regulated lender (and that’s pretty much every lender).

In Linn County, some 3,880 homes in the 100-year flood plain were not insured against the flood. It’s hard to believe that none of those homeowners was paying a mortgage.

Bank regulators are responsible for enforcing the rule that mortgaged homes in the 100-year flood plain be insured against floods. The Federal Deposit Insurance Corporation occasionally penalizes lenders who either don’t tell homeowners they live in the high-risk area or who don’t require them to buy flood insurance.

Bankers and insurance agents say lender negligence is not widespread. (We’ll see.)

Northwest Neighbors President Frank King, whose Time Check home in the 500-year flood plain was totaled in the flood, said a lot of homes that were flooded were either a) bought on contract or b) owned in full by people who rented them for cash flow and didn’t bother with flood insurance.

“That’s how a lot of them got by without flood insurance,” he said.

The FDIC office in Kansas City, Mo., which oversees Iowa, is among the most aggressive enforcers of that rule in the country, said David Dickinson, president of Banker’s Compliance Consulting, based in Central City, Neb.

Since 2000, the FDIC has fined at least seven Eastern Iowa lenders for violating the flood insurance rules. The most severe penalty was against Hills Bank & Trust Co. in 2004, when it was fined $43,700 for failing to tell homeowners in a high-risk area that flood insurance was available and for not requiring flood insurance. Farmers Savings Bank & Trust in Vinton, Security State Bank in Guttenberg and Chelsea Savings Bank in Belle Plaine also have been fined since 2000.

Neither the FDIC nor any other major financial regulator has fined a Cedar Rapids or Iowa City lender for flood insurance violations in recent years.

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Filed under: Cedar Rapids City Council, Flood, , , , ,

One Response

  1. mike says:

    Nice start Adam, maybe this combined with the Governor’s proclamation of March 2009 be Flood Awareness Month will help find some properties where the owner has recourse against a lender broke the law.

    http://www.cedarrapidsdirectory.net/uploads/mandpurch2007.pdf

    Nice information detailing the law that I mention.

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