Insurance Quotes & Advice

Hurricane Dolly may be gone but the cleanup has just begun.  The initial damage estimates have been pegged at between $300 and $750 million but could rise over $1 billion according to insurance experts.

President Bush has declared 15 counties as federal disaster areas which will make them eligible for aid assistance from Federal Emergency Management Agency.  Some residents are still  without electricity and crews are working around the clock to restore power and clean up downed power lines.

Isolated incidents of street and home flooding were reported as the area tries to dry out.  However, the worst fears of FEMA officials were averted as the levee system for the Rio Grande River Valley withstood over a foot of heavy rains over the past two days.

South Padre Island bore the burnt of the Category 2 storm as many buildings suffered broken windows with even a few suffering roof damage.  Although a number of people suffered various injuries, no deaths have been reported thus far which has been a welcome sigh of relief.

You can visit the FEMA’s official website for tips on hurricane preparednes.

The first hurricane of the season made landfall on U.S. soil this afternoon, strengthening to a category 2 storm just before it hit the Texas coast.  With sustained winds in excess of 100 mph the storm has the potential to cause considerable wind damage.

Heavy rains are expected to batter southern Texas and northern Mexico into Thursday with the threat of tornadoes likely. Between 15 and 20 inches of rain is expected threatening many areas with the danger of flash floods.

FEMA officials are also closely monitoring the levee systems along the Rio Grande although the type of massive flooding that devastated New Orleans is unlikely.  The storm track is taking the heaviest rains north of the river and by the time it’s expected to move southwest over the area the storm will have lost considerable strength.

It will probably be a few more days before the we get an idea of the extent of the damage caused by the hurricane.  A number of insurance companies are sending teams to the area to provide quicker response times to their policy holders.

Just into the second month of hurricane season, forecasters have predicted above average activity for the Atlantic Basin this year.

Mortgage insurers have been reeling from the record number of claims due to the rising foreclosure rates in the wake of the subprime collapse.  Unfortunately for them, the worst is yet to come claim’s Fitch Ratings.

“The mortgage insurance industry’s troubles are not over and may, in fact, get worse,” Fitch said in a report today. The industry “underestimated both the scope and severity of the decline in residential mortgage markets that became increasingly acute in 2007.”

About a third of the industry’s total coverage outstanding is for 2007 mortgages, and homebuyers borrowed at least 95 percent of the property’s value on most of those loans, according to Fitch. Borrowers with prime credit scores became delinquent in their first year on 2007 loans at more than twice the rate of their peers who took out mortgages in 2006.

Like the banks that offered the loans, the insurers also had lax standards as business exploded in growth when private mortgage insurance became more competitive with tax law changes.  Now the insurers are paying the price because unlike banks they couldn’t spread their risk around in a secondary markets as with mortgage securitization.

Now we are seeing the flip side, much tighter underwriting standards.  Many of the homebuyers who qualified for insurance in the previous two years would be unable to purchase polices under current conditions.

With banks also tightening their lending standards, you won’t see as many so called “piggy back” loans where buyers don’t have the standard 20% down payment.  So, that means banks will then require more prospective borrowers to purchase Private mortgage insurance or PMI as it is better known as.

While the tighter underwriting standards are obviously a smart move on insurers’ part, it’s also another reason why a quick turnaround in the housing market is becoming less and less likely.