Sunday, September 11, 2005

Housing Loss - Hurrican Katrina - Interest Rates

As the events continue to unfold in the wake of Hurricane Katrina, Gulf Coast residents look forward to a return to normal life. It will be a long time for rebuilding to take place. Water could be unsafe for years. Homeowners in the region need to take a good look at disaster insurance coverage. Hurricane Katrina magnifies the need to reexamine your insurance policy. find out exactly what it covers and get flood and fire protection.

When policyholders are displaced, the immediate need is additional living expenses to pay for food, housing, and other essentials. Typically, insurers provide such funds up to 20 percent of the amount of the policy. The insurer will pay additional living expenses to a policyholder whose home is now uninhabitable. For example, if homeowner's monthly pre-loss expenses were $2,000 (mortgage, utilities) and are $5,000 post-loss (living in a hotel, eating out), the insurer will pay the $3,000 additional cost.

Freddie Mac has announced a three-month suspension of mortgage collections.
The Federal Deposit Insurance Corp., which regulates banks, is asking financial institutions to be generous toward hurricane victims whose loan and insurance payments are due.

Recent gains in energy prices resulting partially from the hurricane, were thought to stay the Federal Reserve's rate-hike program and erase the need for additional short-term interest rate rises through year's end. But according to fed funds futures, the probability of the Fed raising rates is 90 percent for the Sept. 20 meeting tightening credit by 50 basis point.

Economic instability caused by Hurricane Katrina could steady mortgage rates and sustain the life of the housing boom. Private contractors are rushing to cash in on the unprecedented sums to be spent on Hurricane Katrina relief and reconstruction.