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Florida insurance crisis spells mortgage disaster

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Florida insurance crisis spells mortgage disaster


The ongoing insurance crisis in Florida, fueled by the exodus of major insurers and the increased risk of extreme weather events, could trigger a downturn in the state’s real estate market, experts told Newsweek.

Homeowners in the Sunshine State currently pay the highest insurance premiums in the country. Floridians pay private insurers an average premium of about $6,000 a year, according to the latest data from the Insurance Information Institute, or Triple I, according to Barron’s and CNN Business, compared to the national average of $1,700.

Few people can self-ensure against the loss of their homes, and banks require an insurance policy to protect their collateral and provide a mortgage for a house.

The increasingly unaffordable cost of home insurance risks leaving residents uncovered, and thus unable to get a mortgage should they want to buy a new home, which could escalate to a statewide decline in the real estate sector.

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“If you don’t have an insurance policy, it’s basically impossible to take out a mortgage,” Benjamin Keys, an economist and a professor of real estate and finance at the University of Pennsylvania’s Wharton School, told Newsweek.

“And given the important role that financing plays in the housing market, without a functioning insurance market you don’t have a functioning mortgage market, you don’t have a functioning housing market.”

Photo-illustration by Newsweek/Getty

Why Do Many Floridians Risk ‘Going Bare’?

Because of the higher risk posed by climate change, which scientists expect will increase the frequency and severity of extreme weather events in vulnerable states like Florida, “there are more people living in harm’s way, the severity of the disaster is more extreme and the cost of repairs has gone up,” Keys said. “A number of years with large storms and large claims has put some private insurers out of business and led others to simply leave the state.

“Insurers have also been really concerned that a portion of their elevated claims is due to fraud. And they were successful in pressuring the state Legislature to pass sweeping reform that makes it much more insurer-friendly on the fraud front. But in spite of these changes going through, insurers have not returned to Florida on any large scale.”

Between 2022 and 2023, more than a dozen private insurers left Florida, including Farmers Insurance, leaving many residents with a lack of options to insure their homes and considering “going bare,” going without any coverage on their properties.

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According to Keys, “the private market for homeowner insurance has failed” in Florida.

“There’s a large gap in the market of homeowners who would like to have affordable policies from private insurers but are unable to find them and have to turn to a state-run entity called Citizen Property Insurance,” he said.

There are currently an estimated 1.3 million homeowners in the Sunshine State insured by Citizen Property, according to Keys.

What Could Be the Impact on Florida’s Housing Market?

Chicago-based real estate investor Sean O’Dowd thinks that the impact of the ongoing insurance crisis in Florida on the state’s real estate market depends on whether you believe the insurance premiums increases of the past couple of years are a blip or a trend.

“In my opinion, I strongly believe it’s a trend,” O’Dowd, who runs a real estate fund buying single-family homes in highly elite school districts and then renting the homes on 3-plus-year leases, told Newsweek.

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“I’m an institutional SFR [single-family rental], I’ve spent a lot of time with the biggest institutional SFR players and they have given us explicit warning to stay away from Florida, and that if we buy portfolios in Florida, they won’t buy from us because they’re so negative on Florida in the long run, which is scary.”

Florida housing
The increase in real estate prices in South Florida is one of the largest in the U.S. The ongoing Florida insurance crisis could spill over to the state’s housing market if residents are left without affordable home insurance.
CHANDAN KHANNA/AFP via Getty Images

That’s why O’Dowd believes that the current insurance crisis is going to have a “significant negative impact” on the Florida real estate market.

“There’s not a single lender out there that I’m aware of that will give you a mortgage without proof of insurance,” he said.

“The problem is, if you have an insurance payment that’s just as much as the principal and interest payment for the mortgage, if you’ve got an insurance payment that’s five hundred bucks a month, you get to a situation where a homebuyer—especially a first-time homebuyer that doesn’t have a lot of capital to put down for the down payment—has such a weedy monthly payment with this huge insurance premium that they cannot afford to buy a house.”

This is a situation that’s going to “flush a ton of buyers, especially first-time homebuyers and retirees on fixed income, completely out of the market,” O’Dowd said. The impact on the real market then is that homeowners would need to cut prices in order to sell, pulling down the market.

Homebuyers will be hurt by the crisis as much as homeowners, according to O’Dowd.

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“Everything that I’ve been told and I’ve been seeing is insurance rates continue to rise, that makes the monthly payment substantially higher, that makes affordability a lot worse, that pushes down prices—with the one caveat of what happens with retirees who frequently buy in cash,” he said.

Uncommon Knowledge

Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.

Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.



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Man who allegedly defrauded CT victim of $100K+ extradited from Florida

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Man who allegedly defrauded CT victim of $100K+ extradited from Florida


A Florida man was arrested for allegedly defrauding a victim in Connecticut of over $100,000, police said.

On Thursday, Coventry police arrested 29-year-old Osmaldy De La Rosa Nunez of Orlando, Florida, on one count of first-degree larceny after an investigation into a wire fraud in August 2022, according to the department.

Police alleged that De La Rosa Nunez communicated with the victim as a person with whom the victim was familiar and had money transferred to him that was due to a third party which amounted to a loss of around $135,000.

According to police, De La Rosa Nunez was using a fictitious name, and his true identity was discovered with the assistance of the Florida Department of Law Enforcement.

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De La Rosa Nunez was held in Florida as a fugitive from justice, police said. He waived extradition and was transported back to Connecticut to face charges.

De La Rosa Nunez was being held on a $500,000 court-set bond and was scheduled to be arraigned at Rockville Superior Court on Friday.



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Why doesn’t Florida have vehicle inspections?

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Why doesn’t Florida have vehicle inspections?


ORLANDO, Fla. – News 6 traffic safety expert Trooper Steve Montiero answers viewer questions about the rules of the road every week, helping Florida residents become better drivers by being better educated.

Trooper Steve on Thursday was asked, “Why doesn’t Florida have vehicle inspections?”

[EXCLUSIVE: Become a News 6 Insider (it’s FREE) | PINIT! Share your photos]

Florida has not had vehicle inspections, unlike several northern states, for quite some time, Trooper Steve said.

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“In the early ‘80s, Gov. Bob Graham ended vehicle inspections. About 10 years later, they were reinstated until 2001 when Gov. Jeb Bush stopped them due to costs,” Trooper Steve said.

Florida does not require annual vehicle inspections, but there are some laws on the books that allow law-enforcement to keep smoky vehicles off the road, he added.

Florida Statute 316.272 (2) says, “The engine and power mechanism of every motor vehicle shall be so equipped and adjusted as to prevent the escape of excessive fumes or smoke.”

And Florida Statute 316.2935 discusses air pollution control equipment.

If you have a question for Trooper Steve, submit it here.

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For more Ask Trooper Steve content, click or tap here.

Copyright 2024 by WKMG ClickOrlando – All rights reserved.



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Florida deputy's killing of Black airman renews debate on police killings and race

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Florida deputy's killing of Black airman renews debate on police killings and race


WASHINGTON (AP) — In 2020, the top enlisted leader of the Air Force went public with his fear of waking up to the news that a Black airman had been killed by a white police officer.

Then four years later, a Florida deputy shot and killed Senior Airman Roger Fortson in his apartment.

“I doubt if that police officer knew or cared that Roger was an airman. What he saw was a young, Black male,” retired Chief Master Sgt. Kaleth O. Wright said in an interview Wednesday with The Associated Press.

After George Floyd was killed by a white Minneapolis police officer in May 2020, Wright, who like Floyd is Black, felt compelled to speak publicly about the fears that he and his younger troops had. It didn’t seem to matter how hard he’d worked to serve his country. There were still police who would only see him as a threat.

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The national outcry surrounding Floyd’s death pushed Wright to lead some initiatives to better address racial issues within the Air Force. But by his own account, they didn’t go far enough. Fortson’s death has left him wondering if things will ever change.

“Right now, in the midst of what happened to Roger, it’s kind of a big deal. People are talking about it, the Air Force is dealing with it. But in a couple of weeks, it will go away, right?” Wright said.

The investigation into Fortson’s death is ongoing, and the sheriff’s office has not released the name or race of the officer involved.

On Wednesday, Okaloosa County Sheriff Eric Aden went to Hurlburt Field where Fortson served and met with Lt. Gen. Tony Bauernfeind, the head of Air Force Special Operations Command, to talk about the next steps.

Sabu Williams, president of the Okaloosa County NAACP branch, was there and said he did not leave with a sense that the sheriff’s office thought Fortson’s race was a factor in the shooting.

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But “bias certainly played a role in this thing,” Williams said. “From my perspective, we feel we don’t get the benefit of the doubt. It seems to be a ‘shoot first, ask questions later’ kind of thing.”

In a statement posted to his Facebook page late Wednesday, Bauernfeind said the meeting with the sheriff’s office was productive and that the command would host a town hall in the coming days to talk further about the shooting and the way forward.

There is no government-managed national data collection system that tracks fatalities caused by law enforcement officers. The FBI has a database, but it’s voluntary, and less than two-thirds of local, state, tribal and federal agencies provided data for it last year. In any case, there is no breakdown by race.

Databases kept by private organizations, however, have found that fatal police encounters have risen each year since Floyd was killed and those killings are disproportionately of Black people.

Two databases, one by The Washington Post and another compiled by Campaign Zero, run by academics and activists advocating for police accountability, found that while more white people are killed in police encounters overall, Black people are disproportionately killed by police. Black people make up about 12% of the U.S. population but account for about a quarter of police killings in each of the databases.

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In the meeting at Hurlburt, Williams requested that the sheriff’s office pursue de-escalation training and unconscious bias training, which he said the sheriff supported.

The sheriff’s office said in a statement posted on Facebook that they have received the local NAACP’s “list of demands and understand their concerns.” In the meeting at the airfield, the sheriff “emphasized his commitment to do what is right,” it said.

Michael P. Heiskell, the president of the National Association of Criminal Defense Lawyers, said the deputy’s race doesn’t matter when determining whether unconscious bias played a role.

“Whatever the race of this deputy, whether he’s Black, white, Hispanic, whatever — in this instance where this deputy saw a Black person with a weapon and immediately used deadly force, instead of calmly and reflectively assessing the situation, this is it.”

Williams’ NAACP chapter is drafting state legislation it wants to name after Fortson. The bill would require police to use de-escalating language before using force if they encounter someone with a gun who is not being held in a threatening position.

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Released police body camera footage shows Fortson had his gun in his hand when he opened his front door, but the barrel was pointed to the floor. Within seconds the deputy shot him, only afterward telling him to drop the weapon.

“A little bit of de-escalation or discussion” by the deputy could have given the airman the chance to put down the gun, Williams said. “He wasn’t given any time.”

MaCharie Dunbar, a board member of the Black Veterans Project, a national organization created to address racial inequality in the experiences of Black service members, said he wonders whether it would have made a difference if Fortson had been in uniform.

“One thing proven true time and again is that if you’re Black in America, it doesn’t matter what kind of job you have, the clothes you wear, the car you drive, the house you live in,” said Dunbar, who is retired from the Air Force and had been stationed at Hurlburt Field. “At the end of the day, you’re just Black. And there are some who hold on to this ideology that Black people are dangerous.”

Fortson’s shooting occurred against a wider backdrop of increased attention by the military to racial issues in its ranks. Over the past few years, internal reviews have found significant disparities in opportunities for promotion and uneven military punishments.

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But there has been significant pushback against those efforts, with far-right members of Congress criticizing them as being “woke.” Congress this year put caps on what the Pentagon can pay experts in promoting diversity, equity and inclusion.

Wright said that pushback has served to silence much discussion on the issue and, for now, the most helpful thing commanders can do is listen.

“If you’re a white male officer in the United States Air Force, you don’t wake up every day thinking about race,” Wright said. “We have Black airmen and officers that wake up every day and they go into rooms and they’re the only Black person.”

He said commanders need to understand the toll this takes.

“It comes with stress and anxiety. It comes with a feeling of not belonging. And, you know, most of us are taught to just assimilate, right? You know, don’t complain, don’t be the outcast. Don’t be the outsider because, you know, sometimes you get labeled as an angry Black man.”

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If airmen don’t feel like they’re supported in their own units, it’s unlikely they will trust opening up to commanders on an issue as big as Fortson’s shooting, he said.

Wright is now thinking about writing another column, and maybe getting involved on the issue again. But he’s not sure what needs to be done to prevent a future incident. Bringing the sheriff’s deputies on base to help them see Black airmen differently won’t fix the problem without a larger, societal change, he said. Asking commanders to have the equivalent of “the talk” with Black airmen that parents have with their Black children about encounters with the police isn’t a solution either.

“I don’t know that commanders could say anything to airmen that would necessarily be helpful about, ‘if the police knock on your door, do this, don’t do that,’ ” Wright said. “Young African American males, they know the drill, right? They already know the story. And, still, it’s not enough.”

Wright has two sons, ages 22 and 27. His heart has been breaking for Fortson’s mother, who buries her 23-year-old son on Friday.

“That could have easily been one of my sons,” Wright said.

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___

Lauer reported from Philadelphia. Aaron Morrison in New York City contributed to this report.





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