Oct 22, 2009 9:29 pm US/Pacific
Call Kurtis: Flooded Over Insurance
SACRAMENTO (CBS13) ―
Taking care of a big two-story house with a huge yard and pool is one reason Juanita Geise was looking to move,
"I wanted to downsize to a smaller place that had much less yard work involved and move closer to where my daughter lives."
She put an offer on a condo in Natomas. They accepted her offer in March. In April, before her lender would give her any money for the deal, they demanded something odd.
"I had to provide them proof of Flood Insurance."
Flood insurance on a condo she doesn't own? The lender, Direct Mortgage Wholesale, said without it they wouldn't lend to her. So in April she took out a $380.00 Flood Insurance Policy through AAA, which would cover the home for a year.
I had to give them my credit card and have it in place that day in older to get funded."
Bat after that, guess what?
"Then they still turned me down."
The same l ender denied her the money, calling it an "Unacceptable Move" because the new place in Natomas was too close to her current home in Carmichael.
"I thought this is nuts!"
Juanita called AAA to cancel the Flood Insurance, which they set up for her with the Federal Government.
"I called right away and asked that if it didn't go through can you put that back on my credit card… (Laughs) no."
The agent submitted paperwork to National Flood Insurance, but a month later Juanita is still providing Flood Insurance for a condo she doesn't own.
"I'm upset about it that's why I called you. I think its nuts the whole thing is nuts!"
We spoke with Amy Itschner at National Flood insurance who told us;
"We need proof the sale fell through either from the lender or the escrow company."
We then got Juanita's AAA agent in touch with Amy. They worked together to get that policy cancelled.
"(Signs) oh so grateful, you've no idea. I've probably gotten an ulcer over this because it just seems so wrong to me."
So why was Flood Insurance required before she bought the place? We checked with the State of California Department of Real Estate and FEMA. They told us this should not happen. You don't need Flood Insurance until you actually own the property.
Direct Mortgage CEO Jim Beech tells us the buyer only needs to show they have the ability to get the Flood insurance by the time the deal closes. He plans to talk to his staff about Juanita's situation.
But an expert in the insurance industry tells us this is becoming more and more of a problem…especially with big banks. In fact the Comptroller of the Currency is looking into the situation. If you've experienced this problem send us an email and let us know.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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