9/18/2023
Fall Grape Vine Wreath
9/07/2023
ACA 13 California
California state taxes, currently can be raised with a two-thirds vote of the
Legislature.
The business initiative would add a statewide vote requirement on top of that,
though only a simple majority of voters would be needed.
Backed by labor unions, the League of California Cities,
the California State Association of Counties,
and groups that pursue infrastructure funding,
"No levy, charge, or exaction regulating or related to
vehicle miles traveled may be imposed as a condition of
property development or occupancy.” VMT fees are used
as an environmental planning tool to focus development
in more concentrated areas to reduce travel by automobiles.
prohibit advisory votes on how new tax money
should be spent from being on the same ballot as
measures to raise those taxes.
Such advisory votes aren't binding,
can be used to hold officials accountable
if they don’t spend the money as promised.
Local taxes approved by less than a two-thirds vote in 2023,
and presumably increased fees,
would be voided if the business-backed measure passes.
The same goes for state taxes and fees not approved by a statewide vote.
Good for development?
Bad for businesses?
Additional taxes to get California back in the green?
What about local taxes and Proposition 13?
9/06/2023
PMI Mortgage Insurance
Private mortgage insurance (PMI) is a
type of insurance that lenders require borrowers to purchase if they make a
down payment of less than 20% on a conventional mortgage. PMI protects the
lender not the borrower in the event that the borrower defaults on the loan.
PMI works by insuring the lender
against losses if the borrower stops making payments on the mortgage. If the
borrower defaults, the PMI company will reimburse the lender for the remaining
balance of the loan.
PMI is typically paid as a monthly premium
that is added to the borrower's mortgage payment. The amount of the PMI premium
depends on a number of factors, including the borrower's credit score, down
payment amount, and the type of mortgage.
Borrowers can cancel PMI once they
have built up enough equity in their home excepting if they have mortgage
insurance with a FHA loan, then the 1.75% is permanent until they can sell or
refinance to a conventional loan. Generally, borrowers can cancel PMI when
their equity reaches 20% of the original purchase price of the home. However,
some lenders may require borrowers to have 22% or 25% equity before they can
cancel PMI.
The six big mortgage insurance
companies are: Essent MGIC Radian NMI Enact and Arch. There is lender paid
mortgage insurance or borrower paid insurance. It can be paid upfront for a bit
lower interest rate or monthly over time.
Here is a step-by-step explanation of
how PMI works:
1. A
borrower applies for a conventional mortgage with a down payment of less than
20%.
2. The
lender requires the borrower to purchase PMI.
3. The
borrower pays a monthly PMI premium to the PMI company.
4. The PMI
company insures the lender against losses if the borrower defaults on the loan.
5. If the
borrower defaults on the loan, the PMI company reimburses the lender for the
remaining balance of the loan.
Benefits of PMI
PMI can be beneficial for both
borrowers and lenders. For borrowers, PMI can make it possible to qualify for a
mortgage even if they don't have a 20% down payment. For lenders, PMI protects
them against losses if borrowers default on their loans.
Drawbacks of PMI
PMI can be a costly expense for
borrowers. The PMI premium can add hundreds or even thousands of dollars to the
borrower's monthly mortgage payment. Additionally, borrowers may have to pay
PMI for several years, even if they make their mortgage payments on time.
How to avoid PMI
There are a few ways to avoid PMI:
- Make a down
payment of at least 20% on your mortgage.
- Get a piggyback
loan, which is a second mortgage that is used to cover the down payment.
- Ask your lender
about lender-paid PMI (LPMI). LPMI is a type of PMI that is paid by the
lender, not the borrower. However, LPMI is not available from all lenders
and it can be more expensive than borrower-paid PMI.
PMI is a type of mortgage insurance that
lenders require borrowers to purchase if they make a down payment of less than
20% on a conventional mortgage. PMI protects the lender in the event that the
borrower defaults on the loan. PMI can be beneficial for borrowers, but it can
also be a costly expense. There are a few ways to avoid PMI, such as making a
down payment of at least 20% or getting a piggyback loan.
9/05/2023
Fire Hazard Insurance in California
The California homeowners insurance
crisis has worsened in recent months, as
more and more companies have announced
plans to exit the state. This has left
many homeowners scrambling to find
coverage, and has driven up
prices for those who can still get insurance.
The crisis is being caused by a number
of factors, including the
increasing risk of wildfires, climate
change, and
high construction costs. In recent
years, California has experienced a number
of devastating wildfires, which have
caused billions of dollars in damage. This
has made insurers more reluctant to
write policies in fire-prone areas, and has
led to higher premiums for those who
can still get coverage.
Climate change is a factor in the
crisis.
As the Earth's climate warms,
California is expected to
experience more frequent and severe
wildfires. Wildfires are now year round.
California government is moving to ban
Phos-chek and other chemicals used to
fight fires. The red areal spray used
to ritard and stop spread of fires is now
being restricted..
High construction costs are another factor driving up the price of homeowners insurance. The cost of rebuilding a home after a fire has increased dramatically in recent years, and
insurers are passing these costs on to
homeowners in the form of higher
premiums.
Also, exorbitant claims for pipe break/ flooding/ water damage by
galvanized pipes or unlimited tankless water heaters.
In response to the crisis, Insurance
Commissioner Ricardo Lara
has taken few steps, including issuing moratoriums on insurance cancellations
and non-renewals in fire-prone areas.
He
proposed a number of reforms, including allowing insurers to charge
higher premiums in fire-prone areas
and creating a public insurance option.
Lara's response is too little too
slow.
"There are challenges, but I'm very confident
we're going to bring
these companies
back," Ricardo
Lara insurance commissioner says.
Also he says that
forcing companies
"is not
supported by law (according to) our legal team,”
California and top
insurers haven’t left the
state,"
Lara said, they’ve just paused expanding.
- Providing financial assistance to homeowners who make wildfire
mitigation
improvements to their homes.
- Creating a state-run insurance pool that would provide coverage to
homeowners
who cannot get insurance from private insurers.
- Reforming the state's insurance regulations to make it easier for
insurers
to operate in California.
"There isn’t a
shortage now because there are more than
100 insurers still
selling policies in California." Lara says but this is
incorrect.
Lara claims he cannot
stop the big insurance companies from
blacklisting
California homeowners.
However, of the 100
companies listed on the insurance commissioner’s website only 20
answer the phone and
issue a quote. Many are no longer underwriting or offering
ANY hazard insurance
in California. < cough cough> someone is not telling
the truth.
What are causes of the crisis?
The state needs to invest in fire
prevention and mitigation measures,
and it needs to make it easier for
homeowners to rebuild their homes
after a fire.
Where residents build in the path of
danger,
they must face that their property
maybe cannot be covered.
Speed up permit processes.
Have city or county resources boots on
ground after a disaster. The CZU fire in
Santa Cruz mountains and the Paradise
Fire residents still have not rebuilt.
Some fought city planning resistance
to allow prefabricated housing verses
stick built in the years after these
disasters.
U.S. insurers have disbursed $295.8
billion in natural
disaster claims over the past three
years, according to international risk management firm Aon.
That’s a high for the past three-year
period, according to the American
Property Casualty Insurance
Association.
Some homeowner insurance policies
cover damage from all
manner of perils, including fire and
smoke, wind and hail, plumbing issues,
snow and ice, and vandalism and theft.
Floods are generally covered by a
separate federally administered
program. Flood insurance is available
from National Flood Insurance Program
(NFIP). You
can also purchase a FEMA flood insurance policy, or buy
one from a private flood insurance
company. Going forward insurance policies
might exclude lots of items.
Allstate, Erie, State
Farm, Farmers,
Safeguard, Falls Lake, AIG, Berkshire Hathaway
and Nationwide all pulled out of
California. If you have an existing insurance
policy, they hire Safeguard or Ulta
(or some cheap inspection company that pays
an inspector $22 to go take
photographs of the hillsides around your property,
the roof eaves, roof condition, and
any possible perils). They will cancel you
without notice of the cause. Boom and
you will not find the same cost
replacement insurance. IF You fail to
provide the new insurance to your
mortgage lender, the servicer or
lender will put forced place insurance at
about four times the cost with lower
coverage.
Climate has increased damages in
America. Floods,
hurricanes, fire, and natural hazards
are hurting insurance companies.
Examining the changes in the spatial manifestation and the
rate of arrival of large tornado outbreaks - IOPscience
Taxpayer-backed Citizens Property
Insurance in Florida was
the state’s second-largest insurer in 2021 in terms of policies written,
according to the Insurance Information Institute.
Fourteen insurance firms have either left Florida as of April or have policy
portfolios that are failing. Farmer’s, the
fifth-largest homeowners’
insurance provider in the United
States, said in July that it would not renew
nearly a third of its policies in the
Sunshine State. A state-backed policy in
California, where State Farm and
Allstate have withdrawn or significantly cut
back on new policies, covers 3 percent of residents.
Geico closed its sales offices in
California August 2022 and
is also no longer
selling insurance over the phone to California customers.
Geico suffered a $1.9 billion pretax underwriting loss in
2022.
Looks like Geico is next.
My suggestion is
homeowners need an
independent insurance
agent on speed dial.
Know their children's
names (have a deep relationship)
and they can advise
you.
They can apply for
California Fair Plan which is
not great coverage
but might be your only choice.
FAIR Plan can be purchased through an
agent or broker licensed to sell property
insurance and registered with the
California FAIR Plan.
It is NOT Fast and you
will have to give them
money upfront to
issue a declarations page.
C G Caroline Gerardo 9/5/2023
NMLS 324982