Monday, November 30, 2009

New-home sales rise to highest level in a year


Sales of new homes rose last month to the highest level in more than a year as strong activity in the South made up for weakness in the rest of the country.

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Tuesday, November 17, 2009

Outer Banks Economic Indicators

Economic indicators released by the Outer Banks Chamber of Commerce are a good-news, bad-news type of report.

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Thursday, November 5, 2009

Fannie Mae getting into home rental business

Thousands of borrowers on the verge of foreclosure will soon have the option of renting their homes from Fannie Mae, under a policy announced Thursday.

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Wednesday, November 4, 2009

Home sales rise 9.4 percent in September

Home resales in September clocked the largest monthly increase in 26 years as buyers scrambled to complete their purchases before a tax credit for first-time owners expires.

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Home prices rise for third straight month

Home prices rose in August for the third straight month, a rapid pace of recovery that surprised economists and raised questions about how long the trend can last.

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Interest rates climb for third week in a row

Rates for 30-year home loans climbed to 5.03 percent this week, the third consecutive weekly increase.

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Tax Credit Purcahses Extended

Construction spending rises in September

Construction spending in September posted a better-than-expected performance, powered by the largest jump in housing construction in more than six years.

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Pending home sales reach 3-year high

A sign for a home under contract is seen in Philadelphia on Oct. 21. The volume of signed contracts to buy previously occupied homes rose for the eighth straight month in September.Signed contracts to buy previously occupied U.S. homes rose for the eighth straight month in September as buyers scrambled to take advantage of a tax credit for first-time buyers.

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Monday, November 2, 2009

Southern Shores Canal Dredge Project

The best news is that we had a successful bid opening on Tuesday, Oct. 27. The bidder was a local company, Sampson Contracting, Inc. The bid amount was just about $1.7 million, which is under the amount budgeted, but more than was anticipated when we applied for the matching grant. The contract proposal will be presented to the Town Council on Nov. 4th for their approval.

To accomplish the work required for this project, Sampson Contracting will team up with Piedroba Dredging, a Florida company with experience using the hydrocyclone technology.

We still have a few obstacles to overcome, all of which have been addressed in earlier updates. They include a final approval of our Submerged Aquatic Vegetation Relocation Plan, and the acceptance of the hydrocyclone for dewatering the spoil material. We are hopeful that the regulatory authorities will expedite their approval.

Finally, the question arose, once again, about the boats in slips and whether or not they should be removed. As indicated in last week’s update, you would be well-advised to remove them from the water, or relocate them temporarily to another location, not part of the phase one dredge.

Also, the most recent thinking is, that for public safety reasons, the east side of the North Marina will be closed to visitor and ramp traffic during the dredge period.

As always, your questions and thoughts are welcome. You can reach me at 252 619-5996 or

Construction spending rises in September - Outer Banks

Construction spending in September posted a better-than-expected performance, powered by the largest jump in housing construction in more than six years.

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Pending home sales reach 3-year high - Outer Banks

A sign for a home under contract is seen in Philadelphia on Oct. 21. The volume of signed contracts to buy previously occupied homes rose for the eighth straight month in September.Signed contracts to buy previously occupied U.S. homes rose for the eighth straight month in September as buyers scrambled to take advantage of a tax credit for first-time buyers.

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Friday, October 30, 2009

Historic Rates Why Now is the time to Act

Below is a chart of rates over roughly a 1 year timeframe.  There are couple things to take away from this chart and how to use it to encourage prospective buyers to get off the fence.  If you look at the far left side of the graph you will see where 30 year fixed rates (blue line) were sitting in November (6.25%).  From that point through the middle of January, rates dropped to what was at the time an all-time low.  This drop coincided with the Fed announcing they would purchase mortgage backed securities.  From that point through May rates set the all-time low and have bounced around since.  How can you use this with your buyers?  First, rates now sit at the same level they did last year in November...near an all-time low.  They moved around during the summer but were still very good.  Secondly, the Fed announced they would end their mortgage backed securities purchases at the end of the first quarter, 2010.  If the announcement and implementation of the program dropped rates in the manner it did it would be safe to assume the discontinuance of the program could have an opposite effect.  Let's hope this change isn't as dramatic but this illustrates why between now and March will be the time to buy a house.   



David (Drew) Wright

Vice President Mortgage Loan Officer

Bank of America

PO Box 597/4804 N Croatan Hwy

Kitty Hawk, NC 27949

800.831.6692 Toll Free

252.261.6900 Local

252.256.2018 Cell

252.261.6899 Fax

Town considers plant, building heights

Kill Devil Hills continues to investigate two issues that may have an impact on future development along the oceanfront and between the two main highways - N.C 12 and U.S. 158, which are also known as Virginia Dare Trail and Croatan Highway, respectively.

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Foreman addresses League of Women Voters

Kathy Foreman, District 1 Administrator of Guardian ad Litem Services, made a presentation to the League of Women Voters of Currituck County on Oct. 8 at the Currituck County Library.

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Republican Women to meet Oct. 22

On Thursday, Oct. 8, a group of 18 enthusiastic women and one man met in Kill Devil Hills to make important decisions about the newest Republican Woman's organization.

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Senator tells CRC mistake made in legislation

When the North Carolina Coastal Resources Commission (CRC) convenes in Atlantic Beach this week, on the agenda will be discussion about a feasibility study of the use of terminal groins as erosion control devices.

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Former police chief arrested

Francis Thomas D'Ambra, former Manteo police chief, was arrested Saturday, Oct. 10, and charged with impersonating a law-enforcement officer.

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Asian black tiger shrimp?

Madge Williams is storing a nine-inch shrimp in her freezer at Hobo Seafood in Swan Quarter until scientists confirm that it is an Asian black tiger shrimp, a species native to the West Pacific.

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Police seeking public's help

The Town of Nags Head Police Department is seeking information regarding recent crimes in and around Village at Nags Head.

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Homeowners association takes legal action

The Sandpiper Cay Condominium Owners Association Inc. has filed a civil suit against its former president, property manager and management company - Douglas Seay, Susan Seay and Sandpiper Management Co., respectively.

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Accused attorney: He, too, was victim

Editor's note: This is the third of a three-part series about how millions of dollars were stolen from Bank of America, development investors and bank depositors. The result has been multiple lawsuits and an ongoing investigation by the Federal Bureau of Investigation.

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Fire destroys fishing boat

The Colington Fire Department responded to a boat fire in the water behind a residence on Club View Court in the Colington Harbour sub-division just after 8:30 a.m. on Wednesday, Oct. 21.

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Sentinel continues to ask for documents

The Town of Kill Devil Hills continues to withhold what appear to be public documents and has not responded to a suggestion that if there is concern on the part of the public officials, that they join with the Sentinel to ask for an in camera review by a judge to determine if the requested documents should be released to the public.

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FW: Miles of smiles

A sea of dentists and their assistants helped around 1,000 area residents as Dare County hosted one of the largest free dental clinics in the state last Friday and Saturday at the Youth Center and Family Recreation Park in Kill Devil Hills.

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Islanders continue planning for farmers' market

Coastal Harvesters president Joanne Throne briefed Hatteras Island residents Wednesday on progress the non-profit group has made in organizing a farmers' market on the island.

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Oyster restoration projects provide jobs

Although construction has dwindled on the Outer Banks, offshore in the sound there is some serious building going on.

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Block drafts to cut home heating costs

Heating fuel prices are down, but now that there's a nip in the air, you could be discovering all the air leaks in your home.

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Fundraising training offered for area nonprofits

The Duke Nonprofit Management Training program is offering the class "Grassroots Fundraising" with instructor Ruth Peebles beginning at 9 a.m. on Thursday, Nov.10 at The Nature Conservancy offices at Nags Head Woods.

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Town considers plant, building heights


Kill Devil Hills continues to investigate two issues that may have an impact on future development along the oceanfront and between the two main highways - N.C 12 and U.S. 158, which are also known as Virginia Dare Trail and Croatan Highway, respectively.

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RE/MAX Ocean Realty

Michael Lancsek, Broker

2503 N. Croatan Hwy.

Kill Devil Hills, NC 27948

Ph: 888-OBX-OF-NC (629-6362)

Fax: 877-590-6800

Agents: 252-480-4425

Network: LinkedIn   twiTTer




Extended Homebuyer Tax Credit - Outer Banks Real Estate


updated 6:56 p.m. ET, Wed., Oct . 28, 2009

WASHINGTON - Senators agreed Wednesday to extend a popular tax credit for first-time homebuyers and to offer a reduced credit to some repeat buyers.

The tax credit provides up to $8,000 to first-time homebuyers but is set to expire at the end of November.

Senators agreed to extend the existing tax credit for first-time homebuyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years, said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid, D-Nev.

The tax credits would be available to homebuyers who sign sales agreements by the end of April. They would have until the end of June to close on their new homes, said a congressional aide, who spoke on condition of anonymity because he was not authorized to publicly discuss the deal.

Senators were still negotiating the expansion of a separate tax credit that lets money-losing businesses get refunds for taxes paid in previous years, providing them with an immediate source of cash.

Senators in both political parties were hoping to add both tax provisions to a bill that would give people running out of unemployment insurance benefits up to 20 more weeks of federal aid. The Senate could vote on the overall bill as early as Thursday, but lawmakers were still haggling over several unrelated amendments Wednesday evening.

Thursday, October 29, 2009

Home Buying Outer Banks - Tax Credit Update

By Dawn Kopecki and Ryan Donmoyer

Oct. 27 (Bloomberg) -- U.S. Senate leaders moved closer to an agreement replacing an expiring $8,000 tax credit for first- time homebuyers with a smaller one that would expand access to so-called step-up purchasers, two people familiar with the matter said.
The deal would reduce the size of the tax credit to 10 percent of the sale’s price, capped at $7,290, the people said. The credit would be available on home purchases that are under contract by April 30, and borrowers would have 60 days more to close the sale. The existing credit is due to end Nov. 30.
The new agreement, which is still being negotiated and may change, would grant the credit to borrowers who have lived in their current home for at least five years. Lawmakers want to keep home sales from slipping as the economy struggles to recover from the worst drop in home prices since the Great Depression.
The demand for new homes and condominiums may increase by “more than two times because you’re allowing step-up buyers into the equation,” said Andrew Parmentier, a managing partner at Height Analytics, a research firm in Washington. “ You just opened up a whole new pool of people who can buy into those empty homes and empty condos that were built out.”
The income eligibility for first-time homebuyers would remain the same at $75,000 for individuals and $150,000 for couples. The income criteria for step-up buyers would be $125,000 for individuals and $250,000 for couples. The credit would be limited to homes costing $800,000 or less. There is currently no price cap on home purchases.




Friday, July 24, 2009

Interest Rates, FHA, USDA

Another great week for interest rates. We have seen a sharp increase in purchase applications this week in the 200K to 525K range. Many of these clients are anxious to get somethign going and close before the $8,000 tax credit expires. Applications for USDA loans are sharply on the rise as well. We have not seen many of those loans in a long time as the income limits and purchase prices for DARE county did not work with that program. However, the income limits have been raised and the prices have dropped and we are seeing many new clients that can qualify for this program. USDA offers 100% financing without mortgage insurance for a primary residence. 585 credit scores or higher are required and debt-to-income ratios cannot exceed 41%. This is a harder program to qualify for as the debt-to-income ratio guidelines is fairly strict (41% vs. FHA or Conventional can go to 55%.) But for those clients that can qualify for this loan, it is an amazing program for them. Clients who cannot qualify for this program normally can qualify for FHA loans with 3.5% down. Have a great weekend!

Shane Cook
MetLife Home Loans
Senior Mortgage Specialist
Office (800) 256-7887, ext. 222
Fax (866) 669-5871

Thursday, July 23, 2009

Home Resales, Leading Index Probably Rose: U.S. Economy Preview

By Shobhana Chandra

July 19 (Bloomberg) -- Home resales in the U.S. probably rose in June and a gauge of the economic outlook improved, signaling the recession may soon be over, economists said before reports this week.

Purchases of previously owned homes climbed to an annual rate of 4.83 million, the highest level since October, according to the median of 57 estimates in a Bloomberg survey before the National Association of Realtors’ report on July 23. Figures tomorrow may show the index of leading indicators climbed for a third consecutive month.

Mounting evidence that housing is stabilizing is bolstering forecasts that government stimulus efforts will gain traction in coming months and lift the economy from the worst slump in five decades. Other reports may show rising joblessness is weighing on Americans’ moods, tempering optimism about any rebound.
“The end of the recession could be pretty close,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. “We’re getting near the bottom in housing. It’ll still be a very gradual recovery for the economy, with a labor market that’s very weak.”

Reports last week corroborated that the housing slump, now in its fourth year, is dissipating. Housing starts unexpectedly jumped in June to the highest level since November as construction of single-family dwellings climbed by the most since 2004. Building permits, indicating future construction, rose the most in a year.

Signs of Stability

The National Association of Home Builders/Wells Fargo index of builder confidence increased this month to the highest level since September.

One reason for the projected increase in home resales is that prospective buyers are taking advantage of the plunge in prices caused by the foreclosure crisis. Filings reached a record in the first half of 2009, according to RealtyTrac Inc., an Irvine, California-based seller of default data. More than 1.5 million properties got a default or auction notice or were seized by banks in the six months through June.
The New York-based Conference Board’s leading index, which points to the direction of the economy over the next three to six months, rose 0.5 percent last month after a 1.2 percent increase in May, according to the survey median.

The jump in building permits was probably one of the biggest contributors to the predicted gain in the leading index, economists said. Fewer jobless claims and higher stock prices were also likely drivers.

Stocks Rise

Stocks have gained on optimism an economic recovery is at hand. The Standard & Poor’s 500 Index is up 39 percent since reaching a 12-year low on March 9.
A July 24 report may show the Reuters/University of Michigan final index of consumer sentiment fell in July after four consecutive gains, economists predicted. A preliminary reading dropped to the lowest level since March.

The U.S. has lost about 6.5 million jobs since the recession began in December 2007. Economists in a separate survey taken by Bloomberg this month predicted the jobless rate will reach 10 percent by year-end from 9.5 percent in June.

Federal Reserve officials thought the economy was “still quite weak and vulnerable to further adverse shocks,” according to minutes of their June meeting released last week. Even so, the report also said “the economic contraction was slowing and that the decline in activity could cease before long.”

Companies seeing an improvement include CSX Corp., the third-largest U.S. railroad. Jacksonville, Florida-based CSX reported second-quarter profit that topped analysts’ forecasts, and said demand for hauling most freight is stabilizing. Railroad traffic is considered an economic bellwether.

“We’re seeing pretty good stabilization in our markets,” Chief Executive Officer Michael Ward said in an interview last week. “We don’t see any further deterioration, and we see some incremental improvement in the near future.”

Thursday, June 25, 2009

Don't Hold Your Breath: Mortgage Rates Below 5% Are Gone for Good

Posted Jun 25, 2009 07:00am EDT by Peter Gorenstein in Investing, Recession, Housing

Waiting for mortgage rates to once again fall below 5%? Don’t bother. Greg McBride, senior financial analyst at, says those days are gone for good. But, it doesn’t mean you’ve missed your chance to act. Last week, the average 30-year mortgage rate was still a relatively low 5.38%, according to Freddie Mac.

Also, don’t forget there’s always the risk of even higher rates in the near future. As McBride puts it, “It’s like someone sets a table in front of you with a stack of cash. You have to grab the money while it’s there.” He’s got a point. A $400,000 mortgage at 6% costs just shy of $2,400 a month. That same mortgage with 5.35% rate: $2,240 – a savings of $160 a month.

If you’re in the market to buy, prices are also in your favor. Median home values are down more than 16% compared to this time last year. Buying a house is like getting married, MacBride says, “You’ve got to be in it for the long haul and have to be ready for the financial commitment.” If you can say, “I do” on both accounts than the market may have already bottomed for you.


Video on interest rates now.


Wednesday, June 10, 2009

U.S. pending home sales surge, fueling recovery hope.

• On Tuesday June 2, 2009, 2:01 pm EDT

Reuters - A house for sale in California in a file photo. REUTERS/Erin Siegal ...

WASHINGTON (Reuters) - Pending sales of previously owned U.S. homes shot up by 6.7 percent in April, the biggest monthly gain in 7-1/2 years, according to a report on Tuesday that buttressed views the U.S. recession was easing.

The National Association of Realtors said its Pending Home Sales Index, based on new sales contracts, rose to 90.3 in April from 84.6 in March.

It was the third straight monthly increase and the largest jump since October 2001. The monthly gain took the index 3.2 percent above its year-ago level in the latest sign the battered U.S. housing sector was stabilizing.

Economists had expected a rise of just 0.5 percent.

"It's a very positive and encouraging number. It plays into the 'green shoots,' economy stabilization story," said William Hornbarger, senior fixed income strategist at Wachovia Securities in St. Louis.

The blue-chip Dow Jones industrial average (^DJI - News) pushed into positive territory for the year on the news before settling to near-even by midday, with the Dow Jones home builder index (^DJUSHB - News) up 2.7 percent.

The dollar, a safe-haven currency which tends to fall when investors move into riskier assets, slid against the euro to a fresh low for the year on confidence that the worst of the recession was over. Prices for U.S. government bonds edged lower.

While the volume of existing home sales has increased in recent months, nearly half involve properties that have gone through foreclosure or which have been sold for a loss.

Last week, the Realtors' trade group said it would take 10.2 months to clear the overstock of existing homes at April's sales pace. That surplus must be reduced before the housing market can return to health.


An NAR measure of housing affordability that blends factors like home prices and mortgage rates has reached record territory with 30-year mortgage rates hovering near record lows with an abundance of homes on the market.

But waning investor appetite for U.S. government debt that has pushed yields on the 10-year Treasury note sharply higher last week also threatens to drive up mortgage costs. Mortgage rates tend to move in tandem with benchmark bonds.

Yields on the 10-year note reached as high as 3.75 percent last week, the highest level since mid-November.

"Since (the Realtors') data was recorded, mortgage rates have started to move back up. That is something to be wary of going forward," said Lawrence Glazer, managing partner at Mayflower Advisors in Boston.

The Federal Reserve has promised to buy as much as $1.45 trillion in mortgage-related debt to help push down home borrowing rates. In addition, it has pledge to buy $300 billion in longer-term Treasury debt to help lower benchmark yields.

Some analysts expect the Fed to expand its Treasury purchase program at its next policy meeting on June 23-24, and a sharp rise in mortgage rates might force its hand.


The deep downturn in the U.S. housing market touched off a global credit crisis that sent economies worldwide tumbling into recession. Now, signs are emerging that the global economy is beginning to heal.
An Ipsos/Reuters poll of 23,000 people in 23 countries found global consumer confidence was stabilizing after falling for 18 months, another hopeful sign for the world economy.

Lawrence Yun, senior economist at the Realtors' trade group, credited improved home affordability and a new government program that provides an $8,000 tax credit for first-time homebuyers for the surge in U.S. buying activity.
The last time the trade group's pending home sales index had risen for at least three straight months was the period from July through October 2004 -- a housing boom year.

(By Patrick Rucker with Mark Felsenthal in Washington and Richard Leong, Leslie Adler and John Parry in New York; edited by Andrea Ricci)

Interest Rates - Outer Banks, NC

Interest Rates continue to increase today and I have pasted below a link to a great article explaining what is going on and why they are increasing. Fannie Mae has issued three rate increases today and 30 Year Fixed Rates are up to 5.75% with 1 point or 6% with no points this afternoon. I will keep you posted, but my prediction is that rates will continue to increase until the FED meeting on June 23rd and we will see if the government decided to step-in again and lower rates or if they think the economy has recovered enough to allow rates to go back to their natural levels in the 6% range.

Shane Cook
Senior Mortgage Specialist
Office (800) 256-7887, ext. 222
Fax (866) 669-5871

Tuesday, February 24, 2009

Outer Banks Foreclosure Property, Short Sales, Distressed, and Bank Owned Outer Banks Properties - North Carolina

For an list of Outer Banks Foreclosures Short Sales, Distressed Property, and Bank Owned property, use one of the real estate links below. This list is updated on the MLS every 24 hours. If you "Save The Search", you be be notified of any new foreclosure property listings; or ones that have had a price reduction. For a shortened understanding of foreclosures and short sales, please contact me at 888-OBX-OF-NC. The process is different and at times frustrating, so understanifng how the process works will be helpful to any consumers looking for theses types of investment homes, year round homes, and land.





Tuesday, February 17, 2009

North Carolina Wind / Hurricane Insurance Outer Banks, NC Insurance Coverages

Here's the breakdown:

o A 2% Per Occurrence Deductible (5% in Bald Head Island) for any wind damage went into effect under the Beach Plan and Fair Plan February 1, 2009. For renewals and continuations, the effective date is April 1, 2009. This is not a 1% to 2% increase! Beach/Fair plan deductibles were flat rate deductibles – ex. $1,000 on a $100,000 to $200,000 policy; $2,000 deductible over $200,000. Therefore, if you have a $400,000 policy – instead of paying $2,000 towards any wind damage – you will now have to pay $8,000 every time there is wind damage! The deductible is not tied to a hurricane – it is for ANY wind damage whether it is caused by a thunderstorm or nor'easter, etc. If a thunderstorm causes wind damage in Raleigh and that same storm hits the Coast – Raleigh residents might only have to pay $500 and for the same storm damage here – it's $10,000 on a $500,000 house. $500 vs. $10,000 for thunderstorm damage. And if another storm happens to cause wind damage in the same year – that's another $10,000 up front you'll have to pay. Are you now asking yourself – how fair is that? The official notice of the changes can be found at:

o Beach Plan Surcharge Increases – A surcharge is a multiplier to the advisory homeowner's rates ordered by the Dept. of Insurance. The surcharge increases are as follows effective February 1, 2009: For Homeowner's (full peril) – the surcharge is being increased from 1.15 to 1.25. For example, if the ordered rate is $1.00 – then under the Beach Plan you pay $1.25 for insurance. For Homeowner's Wind policies the surcharge factor of 1.05 is being increased to 1.15 – for every $1.00 ordered rate – you pay $1.15 for wind coverage under the Beach Plan. The surcharge is meant to be a deterrent to people from buying coverage under the Beach Plan. The problem is that the surcharge is not a deterrent because the Beach Plan is the only option available to us, especially for wind coverage. People are not calling their insurance agents and asking for Beach Plan coverage - they are being told their only option is Beach Plan coverage!

o So, now here in the eighteen coastal counties, citizens with Beach Plan coverage have an enormous deductible increase and a 15% and 25% surcharge - whereas most citizens in the western part of the state actually get DISCOUNTED RATES for homeowner's coverage because it is a competitive market. We get surcharged - they get discounted.

o Now let's look at the rates statewide: Effective May 1, 2009 new rates go into effect. A chart and territory map can be found at Please open these documents and print to follow along. The Rate Revision Chart shows the Counties/Cities in each territory; the territory number identified on the map; the rate percentage filed by the rate bureau (rate that was requested); the rate percentage ordered by the Insurance Commissioner; the dollar amount filed; and the last column shows the dollar amount ADVISORY RATE ordered by the Insurance Commissioner. First line show that the Currituck, Dare and Hyde beach areas, territory 7, is going to have a 6.5% increase - equivalent to about $2,122 for homeowner's insurance on a $150,000 frame home under an HO-3 policy, classes 1 - 6. On a $300,000 policy - that's $4,244 for general homeowner's insurance: fire and liability. Now add wind insurance AND if necessary - flood insurance. Go to line 7 - Gaston, Mecklenburg and Union Counties. Their rates are going down 6% - equivalent to about $499 per $150,000 of coverage. BUT REMEMBER - THEIR RATES ARE DISCOUNTED! So on a 300,000 policy, those is Gaston, Mecklenburg and Union Counties might only be paying $800 for general homeowner's insurance and they do not have to pay for additional wind coverage or flood insurance. AND they only have to pay a small deductible! $800 in Mecklenburg vs. $4,244 in the Dare beach area for the same HO-3 -general fire/liability policy. Add the wind/hail coverage and flood and you are probably looking at possibly $7,000 - $8,000 in insurance costs. I don't think anyone that lives on the coast has a problem with paying more for coverage because of being adjacent to the Atlantic Ocean, but are you now thinking even more - How is this fair?

o If you read the Raleigh News and Observer/Charlotte Observer over the latter part of 2008 - you would have seen in articles and letters to the editor the opinion that that the coastal counties are all wealthy citizens who are not paying their fair share. Those "beach" people are getting off easy paying "cheap" insurance rates under the Beach Plan. Well, we've already dispelled that myth above! And for those "wealthy beach" people - the Beach Plan covers the 18 coastal counties of Beaufort, Brunswick, Camden, Carteret, Chowan, Craven, Currituck, Dare, Hyde, Jones, New Hanover, Onslow, Pamlico, Pasquotank, Pender, Perquimans, Tyrrell, and Washington.

o The citizens west of I-95 have been led to believe that their insurance rates are going to go up because the Beach Plan does not have enough in reserves and surplus to cover losses in the event of a major hurricane - a 1 in 100 or 150 year storm. Insurance companies are assessed an amount for damages over and above what the Beach Plan has available to pay claims. This is done in "layers". Therefore, the insurance companies have to pay their share of the costs of which they say will be passed on to their policyholders statewide. The various insurance companies writing coverage in NC each have reinsurance coverage to assist in paying for assessments. When there is a loss, the loss is not recouped in just one year - it is spread out over a period of years. One insurance agent told me that in the past twenty years, there may have only been one assessment to the insurance companies.

o The Beach Plan was created in 1969 and interestingly enough - has yet to request an IRS ruling to determine if surplus funds - those over and above mandated reserves - are tax exempt. Typically, any funds seen as profit - the surplus - is viewed as taxable income to the IRS. The Beach Plan is an Association - not an "insurance company" - and so without ever determining the answer, the surplus has been distributed to the member companies. What?? So for years, with no major storms and assessment - monies have been distributed from the Beach Plan, thus perhaps creating the so-called problem that the Beach Plan does not have enough money in reserves or in reinsurance to cover the big one.

o The Beach Plan was originally intended to provide "essential property insurance" on the coastal barriers islands. It provided coverage for fire and extended coverage for wind, smoke, hail, aircraft, riot and civil commotion, and vehicle damage. In 1998, the Beach plan was expanded to the eighteen coastal counties for wind only coverage and that is when companies began excluding wind from their policies and dumping the wind exposure into the Beach Plan wind pool. The Beach Plan was expanded again in 2003 to provide homeowner's coverage in the eighteen coastal counties. Why homeowners coverage in the beach plan? Because most companies were not willing to write here even with the ability to exclude wind. Why weren't they willing to write here with wind excluded? The reason was and is the theory of concurrent causation. (example – you might have a fire at the same time you have a storm therefore the loss is paid as fire rather than windstorm.) Even in the recent past courts have made insurers pay flood claims as wind damage. The insurance companies are upset that the exposure has grown from about $17.3 billion in 2003 to about $74 billion in 2009. The risk of assessments from a major hurricane is real with this exposure and so few dollars in reserves, reinsurance (about $2.7 billion). Insurance companies are saying that there should be at least $6 - $6.5 billion in reserves for the Beach Plan to be solvent in the event that a major hurricane hits the coast. This amount is needed to reduce the risk of huge assessments to smaller companies, which could cause them to go out of business. There are fourteen members of the Beach Plan Board - 7 Insurance Company reps, 4 Insurance Agents and 3 public reps. Well, how did the Beach Plan exposure grow so large and who allowed this to happen?

o In response to Hurricane Katrina in 2005, the Beach Plan member companies agreed not to touch the surplus and allow the fund to grow. The Beach Plan board decided last year to increase the reserve fund from $750,000 to $1.1 Billion. Included in their report to the General Assembly, the Joint Select Study Committee on the Impact of Hurricanes on the Insurance Industry recommended amending Beach Plan legislation to not allow any distributions of the surplus to members companies and to only use surplus fund for claims, expenses and reinsurance. This one move will go a long way to address the Beach Plan solvency issue and member assessments!

o We pay more for coverage because of the threat of hurricanes. We have a huge deductible because of the threat of hurricanes. Statewide actual loss data, wind claims data has been requested but has yet to be provided by the Department of Insurance. On Tuesday, the newly formed organization NC 20 sponsored a Coastal Insurance Symposium in New Bern. Here's historical hurricane data that was provided: Out of the 15 most costly hurricanes (does not include flood damage) to hit the United States, eight of them impacted North Carolina. Out of the eight, six hit Central and Western North Carolina! Hurricanes are not just a coastal problem! A hurricane deductible should apply stat wide!

o Other info from NC 20 - We are always compared to Florida when discussing the threat of hurricanes. Florida has about 1225 miles of coastline where it only 138 miles wide and is densely populated along the coast. Over a 153 year period (1851 - 2004) 19 hurricanes category 3 or above hit Florida - three were category 5 and six were category 4. During the same 153 time period, 6 hurricanes category 3 or above hit NC - there were ZERO category 5 storms and only ONE category 6 storm.

o Dare County and other coastal towns/counties have legally challenged the surcharge increases and deductible changes to the Beach and Fair Plan approved by the former Insurance Commissioner Jim Long. Two bills - one in the House and one in the Senate have been introduced in the General Assembly regarding the homeowner's insurance rate changes and Beach Plan/Fair Plan changes. Work is continuing on these items. Due to the length of this report - You'll get an update on the progress in the legal/legislative arena next week with info on the Joint Select Study Committee Report.

o With the nationwide hot topic of discussion being economic stimulus and "how to help people avoid foreclosure", this is the worst time to implement any increases to the cost of owning a home! These rate increases and deductible changes will have an impact on the ability to reduce the inventory of approximately 2,600 homes on the market from Corolla to Hatteras - not including Currituck or Dare mainland. They will have an impact on financing, refinancing, selling a home and KEEPING A HOME! These changes will have a huge impact on our small businesses, especially since a 2% deductible is calculated on each policy item: 2% on each building, 2% on contents, etc.

The only way we can a make a difference is if we all get involved! Your legislative committee will do the "heavy lifting" but your support is necessary!

o Contact your insurance agent and ask how these changes are going to affect you.

o Contact Representative Tim Spear at 919-733-3029,; Representative Bill Owens at 919-733-0010,; and Senator Marc Basnight at 919-733-6854,

o If you are involved in property management, contact your owners and request that they contact their insurance agent. If owners live in other parts of NC, tell them they need to contact their local legislators and express their concerns.

o Email me the amount of coverage you have on your home-structure only and the total you are paying for coverage! THANKS to those that have emailed me a summary of their total coverage or scanned their policies and sent them. We need to show to legislators just what it costs for insurance on the coast!

o The current Insurance Commissioner Wayne Goodwin has the power to freeze the May 1 rate increase effective date and also stop the Beach Plan/Fair Plan changes. CALL THE INSURANCE COMMISSIONER'S OFFICE AT 919-733-3058 and express that these changes are not fair and are discriminatory to the coast. Share how much your coverage costs have changed over the past several years and how this extra cost will impact you! ASK THAT HE TAKE ACTION! Then request a written confirmation of the call!

o Email me at and let me know of your progress in these areas!

o Mark your calendars and attend the Coastal Insurance Forum, sponsored by the League of Women Voters, on Thursday, March 5th at 7:30 p.m. at the KDH Town Hall!

o We are working diligently with NC 20 on this issue; NC 20 is a coalition of public and private interests in the twenty coastal CAMA counties. For more information, check out Review NC 20's position statement below:
NC 20 Position Statement
North Carolina Homeowners Insurance

NC 20 supports fair and accessible homeowner's insurance rates across the state.

NC 20 supports a stay of the effective date until May of 2011 on the changes made to the Beach Plan and Fair Plan approved by the Department of Insurance Commissioner on November 21, 2008.

NC 20 supports a stay on the effective date until May 2011 on the homeowners insurance rates ordered December 18, 2008 by the Department of Insurance Commissioner.

NC 20 encourages the legislature to appoint a study committee to comprehensively review the NC Insurance System which includes the Rate Bureau, Department of Insurance, NCJUA, and NCIUA.

NC 20 supports the creation of an Insurance Commission similar to the model of the Utilities Commission.

NC 20 supports transparency, accountability and verifiability of the North Carolina insurance system for a higher level of consumer protection.

NC 20 supports the use of actuarial data over modeling.

NC 20 supports statewide rate equity for HO-3 homeowner's policies.

NC 20 supports the current maximum coverage limit of $1.5 million under the Beach Plan.

NC 20 supports statewide wind deductibles triggered by named hurricanes and capped at 1% statewide.

NC 20 supports incentive programs and credits for wind damage mitigation

NC 20 does not support a cap on insurer assessments.
Willo Kelly
Government Affairs Director
Outer Banks Home Builders Association
Outer Banks Association of Realtors
(252) 202-7927

Tuesday, February 10, 2009

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