St. Helena, California is not alone. People in Dyersville, Iowa also have recieved letters concerning Country Wide Home Loans and the raising of flood insurance premiums. The letter appeared very intimidating and seemed to imply three things: That the increase was a FEMA requirement, that we have no choice, and it is because of a new flood plain requirement.
A lady at FEMA explained this was not so. All that is required is that the outstanding mortgage is required to be covered. FEMA has three recommendations to loan companies. 1) cover only the outstanding loan, 2)$250,000 max, or 3) up to the max of the insurance coverage a person has on the property.
Because Country wide can only recover from FEMA the outstanding balance of the mortgage and Country Wide does not (supposedly) see any of the insurance premiums, the only benefit we can figure is if Country Wide is trying to build up their escrow accounts for "good looks" at audit time. We owe very little on our mortgage, our FEMA insurance bill is based on the original amount and they claim we need to increase this by $36,000 more!
I have no idea if this is a ripoff, but it is sure a very high handed and unprofessional way of getting more money from the consumer. My real question is "WHY?" My insurance agent and I cannot figure the reason for this increase.
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