Housing.com News, Analysis & Opinion: No disaster relief from bankruptcy

Take this article about the problems disaster-stricken homeowners are facing under the new bankruptcy laws, set to take effect October 17th. Of key importance is the fact that homeowners who have refinanced end up losing their protections when disaster strikes.

Interesting, isn't it? On one hand homeowners are being exhorted and cajoled to refinance and cash out to buy more with the money from their equity. On the other hand, when a terrible tragedy occurs and they lose their homes, the new laws will force them to pay back those debts, which will further compound their losses and destroy their financial futures.

To say that stories like this don't bode well for the massive losses suffered from Hurricane Katrina is an understatement.

The moral here is twofold. First, buy the right kind of insurance for where you live...accident, disaster, terror, whatever. Just get it. Second, think very carefully about how you refinance and what you're spending it on. It might come back to haunt you when you least expect it.

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I'm impressed with the L.A. Times' coverage of housing and real estate matters of late. Most likely it's due to the massive price overruns in Southern California, but their writers have a good grasp of the issues when it comes to home ownership and financing. Take this article about the problems disaster-stricken homeowners are facing under the new bankruptcy laws, set to take effect October 17th. Of key importance is the fact that homeowners who have refinanced end up losing their protections when disaster strikes. Interesting, isn't it? On one hand homeowners are being exhorted and cajoled to refinance and cash out to buy more with the money from their equity. On the other hand, when a terrible tragedy occurs and they lose their homes, the new laws will force them to pay back those debts, which will further compound their losses and destroy their financial futures. To say that stories like this don't bode well for the massive losses suffered from Hurricane Katrina is an understatement. The moral here is twofold. First, buy the right kind of insurance for where you live...accident, disaster, terror, whatever. Just get it. Second, think very carefully about how you refinance and what you're spending it on. It might come back to haunt you when you least expect it.