We bought a house, the sellers disclosed to us that the house had flooded during a?

Question

tropical storm, we knew it was in a 100 year flood plain. However the house was rezoned and designated as a "high flood zone" we were quoted one price from the insurance company for flood insurance, so we could close, which was 675.00 a year, now less than 4 months later, we were hit with an escrow shortage, for 4300.00 . we can pay that in full before the end of the year or our mortgage will go from 1400.00 a month to 1900.09 for a year. My question is, shouldnt that have been disclosed to us from the sellers that this house was rezoned in a higher risk flood zone? Because I damn sure would not have bought this house if I had known that the flood insurance would have been so high. thanks

Answer 1

Is there is a chance that each time the sellers renewed their policy it was just renewed without a review. So maybe the sellers had no idea? And would you even be able to prove the sellers knew if it did have to be disclosed? It seems not even your insurance company knew when they issued your policy.

But I understand how you feel... I already think insurance companies are a scam! Especially when they raise your premiums based on your credit score like in states such as Missouri.

Answer 2

Don't just roll over and play dead! In looking at the other answers I think the "Cost to Cure" clause (CTC) can and would apply. In most every boiler plate purchase contract I've read they are included. Unfortunately they are often to used incorrectly by real estate agents. The cost to cure clauses found in purchase agreements was created for exactly this scenario. The seller either didn't know or chose not to disclose the leak. Read you purchase agreement and any addendum that apply. If you feel you need help. Call your real estate agent . If you did this as a private sale without an agent ask whom ever wrote the contract if you have a CTC. Housing advocacy groups in your area may also be a resource. Lastly talk to your new neighbors find out if you seller had disclosed to them the roof problems. If the seller had you should have cause to litigate. Your home inspection company would also be on the hook. What type of guarantee/ warranty did they rpovide you with? Get a minimum of 3 bids have the problem fixed. Then work at getting you money back from the seller if they witheheld information or the inspection company if the were neglegent. I have a hard time reading all of the answers that say give up, YOU ONLY CLOSED THIS TRASACTION 2 WEEKS AGO.

Answer 3

You moved in a few months ago so you should have pre-paid a full year's worth of hazard insurance and flood insurance. Check your closing statement, but it is almost guaranteed you paid these at closing (or most banks wouldn't let you close).

Your escrow account is set up to pay for insurance and taxes. The only thing you didn't pre-pay for the year at closing was property taxes. In many areas these are due towards the end of the year, (our area bills in September). If your escrow account didn't have money to cover the taxes, the lender pays them and bill you the difference either in a lump sum or add it to your payment for next year. It is very likely that they are still confused and that the amount they are seeking is too much (which would cause an escrow refund next year). Call the lender, find out what's going on.

One other note:

The flood insurance is $675 a year in a high flood zone. That didn't change, it is a federal program and that's the rate in a high flood zone. The rate not in a high flood zone is about $400 a year. There is a good chance that the previous owner didn't even know that it had recently changed to a high flood zone. The difference is only $275 a year anyway!

good luck!

Answer 4

I'm not sure of the problem - is the escrow shortage anything to do with the flood insurance?

They mentioned the flood. You talked to the insurance companies and they gave you a quote. I don't think the vendors are responsible for knowing the classification of the flood zone by the insurance company - that's why you got a quote, isn't it?

Maybe I have missed something crucial.

Answer 5

Is it possible that the fema flood map was revised since your quote for the flood insurance? If it was revised the lender can require more coverage.

Having bought a home where flood damage was disclosed should have been a red flag that insurance rates could go up in this area.

Not the sellers fault.

Good Luck

Answer 6

The sellers have to disclose the flood damage, but they do not have to disclose how much insurance is going to be.

I must have missed something also, because if you were given a quote and the actual amount is significantly higher, something is wrong.

Answer 7

I think your escrow shortage was in regard to a pro-rated insurance issue. I don't see how that would affect your actuall mortgage payments unless you have mortgage insurance that is tied in with your hazard insurance. Ask your Realtor and your Loan Officer to explain the numbers to you until you understand it that is their job. You can also talk to a Real Estate attourney if you feel somthing was overlooked by your Realtor.

Answer 8

Federal flood zone information is publicly available. Whether seller disclosure is therefore "required" is doubtful. It sounds like you may have been quoted the wrong flood insurance premium.