Updated 05/21/2012 07:37 PM
Syracuse man at center of flood insurance suit
New proposed FEMA flood maps are threatening to force more than a thousand people in and around Syracuse to buy flood insurance for the first time. Now a city man is fighting a different battle that may have implications for his neighbors and others across the country. As our Kat De Maria tells us, a lawsuit filed on behalf of 59-year-old Gordon Casey could settle the question of how much insurance banks and lenders can legally force you to buy.
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SYRACUSE, N.Y. -- "Home sweet home. It's affordable for me. That's why I've stayed here so long," said 59-year-old Gordon Casey of Hartson Street in Syracuse.
After more than 15 years, Casey's home is suddenly getting less affordable. Costs have gone up for everyone, especially those on fixed incomes, like him. But Casey's problem, living in the area near Harbor Brook, is flood insurance.
"It was going up a bit, little by little, didn't pay much attention to it. Then the last couple of years, it just started shooting up even higher and higher, like outrageously," Casey said.
The first dramatic change came about two years ago.
"I received a letter in the mail stating I had insufficient flood insurance and that they had to raise it to like 80 percent or whatever of what it would cost to rebuild my house," Casey said.
Casey had previously been paying for flood insurance based on what was left on his mortgage. This past winter, another letter came with an even more complicated explanation requiring him to carry nearly a quarter million dollars in insurance for his less than hundred-thousand dollar home.
"We were sort of being taken advantage of," Casey said.
Minnesota law firm Nichols Kaster agreed and attorney Kai Richter filed a class action lawsuit on behalf of Gordon and potentially others in New York and across the country.
"It's not right for lenders to change the terms of borrowers' agreements and ask them to pay for flood insurance that wasn't required at the time they opened up their loan," Richter said.
Richter says that's tantamount to changing any other term of a homeowner's loan, like the interest rate, for example. And he adds what the lenders asked Gordon to buy is more than what the law requires.
Even though it's become a national issue, people in and around Syracuse could be watching closely, as new FEMA flood maps threaten to add more than a thousand more people to the area's flood plains.
"Just hoping things go right with me and everybody and hope things get straightened around and make it right with people," Casey said.
Senator Charles Schumer is also getting involved in the flood insurance issue, asking the Consumer Financial Protection Bureau to look into whether lenders are making people buy more than the necessary amount of flood insurance.
In a statement he said, “When it comes to thousands of dollars a year tacked on to residents’ flood insurance costs, there should be absolutely no ambiguity as to what is required of homeowners’ flood insurance responsibilities.”