FIRE FALLOUT & TARIFF WARS

 

FIRE SEASON

How to describe the pain and suffering, grief and loss surrounding the LA fires? 

Both my husband and I were born and raised in Los Angeles, and attended university in LA.  (cross-town rivals!)  We’ve both lived through fires in our neighborhoods but never had to face the loss of our home.  We are devastated. 

Insurance was already at a crisis state in California, and this will exacerbate the situation.  The three insurance companies-- with the most exposure in order of number of policies-- in Pacific Palisades and Altadena are:   State Farm, the FAIR plan and Farmers.  The Fair Plan, known as the insurer of last resort, has limited reserves such that they will need to be “augmented” by the rest of the California insurers per the setup of the plan.

The Fair plan also limited insurance coverage to $3 Million, so many of the  homes they insured in the Palisades are woefully underinsured.

How does all this shake out for the rest of the state?  All of our premiums will rise.  It will become more difficult to insure in many areas noted as fire-prone. This will render some areas as “uninsurable” and therefore unfinanceable.  Cash only.  Only time will tell exactly how it all plays out. But it is not good for anybody. 

TARIFF WARS

As I write this the tariffs have been temporarily stayed against Mexico and now Canada. The stock market reacted quite unfavorably due to the unknown consequences of the tariffs, and whether they might increase costs to businesses and individuals across the country, thereby increasing inflation.  

All this has had the result of keeping mortgage rates right about where they have been, hovering around 7%.  This is beginning to look like the new normal, and the reality is 7% is close to (maybe a tad over) the average mortgage rates of the last 30-40 years.  But that does not make it any easier for home buyers who are facing inflated home prices due to lack of inventory and continuing demand.

DEBT CONSOLIDATION

We are currently working with clients on refinances for debt consolidation using fixed rate 2^nd liens.  This protects their low-rate first mortgages until they are ready to move or refinance their first loans. 

We have access to a number of different programs for HELOANs (fixed) and HELOCS (floating) depending on specific needs and parameters of the borrower.

As always, call us with any questions you may have.