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South Carolina bill to change forclosure law

A South Carolina state representative is planning to introduce a bill that would prevent a homeowner from being foreclosed upon due to being behind on flood insurance payments. The bill is being proposed in response to the rise in flood insurance rates that thousands of residents in South Carolina are dealing with. Under the new law, a bank could not consider failure to pay flood insurance as grounds for foreclosure if the homeowner is otherwise current on the mortgage.

The representative has stated that the federal government essentially rewrote homeowners' mortgage terms by increasing flood insurance premiums. The rise in rates was caused by a bill passed by Congress that eliminates subsidies responsible for limiting flood insurance rates on properties that were built prior to local flood maps being established in the 1970s. Some South Carolina residents have seen their flood insurance payments triple since the bill was passed. The federal government has stated that the increased revenue will allow the National Flood Insurance Program to return to solvency after handling Hurricanes Katrina and Sandy.

Proponents of the bill state that the increase in rates has caused chaos in the local housing market, however. Homeowners are feeling squeezed, and certain properties have proven to be extremely difficult to sell. Some South Carolina real estate agents have reported that prospective buyers will put an end to a potential deal after realizing the cost of flood insurance, which has been known to cost over $10,000 per year.

Depending on what Congress ultimately decides to do, more and more homeowners may be facing foreclosure in South Carolina. Fortunately, there are alternatives to foreclosure that can be considered. Short sales, deeds and bankruptcy might be viable options for people that want to avoid foreclosure due to skyrocketing flood insurance payments.

Source: thestate.com, "SC bill would halt foreclosures due to flood insurance rates" Dan Burley, Jan. 08, 2014

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