Bob Trentlyon at Yale Football Game. |
The following was sent to me via email by my friend Yale Alumnus Robert Trentlyon, who gave me permission a few weeks ago to post any of his missives that appear intended for public dissemination. I post without editing, other than a minor tweak to the headline.
THIRTY-YEAR MORTGAGES IN FLOOD ZONES?
August 19, 2013
The real estate business has
survived for years on 30 year mortgages.
Will the banks continue to issue 30 year mortgages if a building is in
the flood zone? In the past a bank could
lend money with the assurance that the building would be there for 30 years,
and if the owner did not pay his monthly interest, the bank could foreclose. But what if the building is washed away or
under water, then what recourse has the bank?
This is no longer a hypothetical
question. That is why NYC government
should not encourage building in the flood zones of NYC. Locating new
construction in a flood plain will just increase the problems NYC has for
trying to rescue people whose lives and property are threatened by the next
hurricane. Present plans are dependent
on a government bailout when hurricanes or high water do damage to buildings.
The developers are willing to take the
risk of flooding, because there is actually no risk to them. Developers never use any of their own money
in developing a new project. The
developer borrows the money and sells the residence to an eager buyer who either
pays cash or takes out a long term mortgage.
There is no question new condo owners want a river or ocean view.
The
present proposed patchwork plan of defenses will not be sufficient to prevent
flooding from the rising ocean or from storm surges. There must be a proven
plan that can be used to create barriers high enough and strong enough to keep
out the ocean and that can be built higher as the sea level rises. Even such barriers may only give us another
hundred years.
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