Nervous properties owners in the shadow of Louisiana's Mississippi River levee and beyond are bypassing the normal 30-day waiting period for flood insurance by taking out new mortgages on their homes or camps, which makes them immediately eligible for coverage.
"Most of us between the Mississippi River and the Ouachita River have had inquiries, and we have issued some of those mortgages," said Richland Bank President Jerome Vascocu.
Vascocu said Louisiana Bankers Association members had a conference call with Federal Emergency Management Agency officials to confirm the legality of the practice.
FEMA oversees the national National Flood Insurance Program.
"FEMA told us that even with a potential pending threat of flooding, the law allows property owners to secure immediate coverage on a new loan as soon as the loan is closed," Vascocu said.
FEMA hadn't returned a call from The News-Star late Monday.
Vascocu and other bankers and insurance agents said there is no minimum required on the mortgage. The loan could be, for example, as little as $1,000.
Harvey Hales, who owns a Shelter Insurance agency in Monroe, said he was taken by surprise by the practice.
"Word got out and people begin doing it," Hales said. "A lot of us weren't sure, but we've researched it with our insurance companies and FEMA and it's not improper or illegal.
"My guess is it's been that way for years, but this is the first time this many people have figured it out. I have to admit it goes against my grain, but it's legitimate."
Though Hales had never seen the practice before, Bank of Oak Ridge President Gene Allen said bypassing the 30-day waiting period by taking a new mortgage has been more common in the Delta.
"We've done it before, and we're doing it now, even though we've only written one this time," Allen said. "We've definitely had interest."
But Ouachita Independent Bank chief executive Clyde White said his board voted against issuing new mortgages just to bypass the waiting period for flood insurance.
"There's been a lot of discussion about it, and it was the buzz at the Louisiana Bankers Association convention (earlier this month)," White said. "But we're not comfortable doing it. I'm not confident that the government will stand behind the insurance if its secured in this manner. There's a loophole in the law, but nothing is cut and dried. We feel like it could ultimately be construed as insurance fraud.
"We've had interest, but we're not going to do it. Our board decided to take the high road."
"Most of us between the Mississippi River and the Ouachita River have had inquiries, and we have issued some of those mortgages," said Richland Bank President Jerome Vascocu.
Vascocu said Louisiana Bankers Association members had a conference call with Federal Emergency Management Agency officials to confirm the legality of the practice.
FEMA oversees the national National Flood Insurance Program.
"FEMA told us that even with a potential pending threat of flooding, the law allows property owners to secure immediate coverage on a new loan as soon as the loan is closed," Vascocu said.
FEMA hadn't returned a call from The News-Star late Monday.
Vascocu and other bankers and insurance agents said there is no minimum required on the mortgage. The loan could be, for example, as little as $1,000.
Harvey Hales, who owns a Shelter Insurance agency in Monroe, said he was taken by surprise by the practice.
"Word got out and people begin doing it," Hales said. "A lot of us weren't sure, but we've researched it with our insurance companies and FEMA and it's not improper or illegal.
"My guess is it's been that way for years, but this is the first time this many people have figured it out. I have to admit it goes against my grain, but it's legitimate."
Though Hales had never seen the practice before, Bank of Oak Ridge President Gene Allen said bypassing the 30-day waiting period by taking a new mortgage has been more common in the Delta.
"We've done it before, and we're doing it now, even though we've only written one this time," Allen said. "We've definitely had interest."
But Ouachita Independent Bank chief executive Clyde White said his board voted against issuing new mortgages just to bypass the waiting period for flood insurance.
"There's been a lot of discussion about it, and it was the buzz at the Louisiana Bankers Association convention (earlier this month)," White said. "But we're not comfortable doing it. I'm not confident that the government will stand behind the insurance if its secured in this manner. There's a loophole in the law, but nothing is cut and dried. We feel like it could ultimately be construed as insurance fraud.
"We've had interest, but we're not going to do it. Our board decided to take the high road."
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