And, if You Make it Through the Mortgage Maze, then There’s Insurance

Indianapolis  Saving money on the ticket I was flying out of Indianapolis and that meant joining the truck drivers and precious few others on the interstates and US highways in the middle of the night linking Detroit and Indianapolis, so I could beat the rain and make the plane.

In one of our last meetings we had met with the directors of Detroit Action Commonwealth at their offices to discuss some collaborations on our organizing programs and staffing to move the ACORN Home Savers Campaign forward along with their anti-eviction and housing work. I got an email adding another mountain to climb for families trying to rebuild their neighborhoods and achieve home ownership in Detroit: insurance.

The message started out as a success story for one of their members being able to buy their house in Detroit, but then it turned dark. When they had to get insurance in order to maintain the mortgage, which is a fairly standard requirement, the only companies that would touch them wanted to charge an annual premium that would be equal to one-sixth of the total value of the property. On a home worth even as little as $30,000, that would mean paying $5000 annually for insurance. The math is fairly simple to follow. If worth, $60,000, insurance would be $1000 per month or $12,000 per year. At $100,000 it would be $16,666.67, although I would bet that at that point it starts to go down, because this predatory pricing to rip off lower income families likely doesn’t extend her up the income scale. Ridiculous! What risk is the insurance supposed to be covering?

Of course if car insurance routinely costs $400 or $500 a month, maybe this all looks like some ol’, same ol’ to both the embattled people in the neighborhood and something that the insurance folks think they can defend, and the big banks can hide behind with their precious few mortgages in the city. Here’s my question. Given the disaster in the Detroit neighborhoods, why aren’t homeowners able to avail themselves of the same governmental insurance pools that are available to cover people in Louisiana and Florida where insurers are unwilling to stand against the risks of hurricanes and flooding? Deindustrialization is a disaster in these neighborhoods, too! Sure, it’s not cheap and, given the federal government’s willful refusal to ignore the consequences of climate change, it’s also somewhat precarious, but since I pay it myself along with most people in live in New Orleans, I can guarantee you its not one-sixth of a home’s appraisal. It’s more in the 3% range. That’s not cheap, but it’s more of a low rise hill to climb, than a Mount Everest of a mountain to scale for homeowners.

But, I understood the message from our colleagues at DAC, no matter what a real solution might be, it would involve the powers that be actually caring about urban America and in the case of Detroit, not walking out of the room every time the city and the problems of its people come up for discussion. Detroiters can’t afford insurance, and it seems they can’t buy a break either.

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