Evan Seacat, a senior director at Franklin Street

|

MIAMI—Owners and buyers of multifamily housing areexperiencing sticker shock when they refinance, sell or purchaseproperties. Insurance premiums have jumped as much as 25% becauseof the broadened insurance requirements set forth by lenders.

|

GlobeSt.com caught up with Ryan Cassidy and EvanSeacat, both senior directors at Franklin Street InsuranceServices, for a deeper understanding of why lenders havechanged their standards and what owners and buyers can expect inpart one of this exclusive interview. Stay tuned or part two, inwhich the duo will discuss how changing lender practices haveimpacted the market.

|

GlobeSt.com: What caused originators andbuyers of multifamily mortgages to change insurance requirements onmultifamily properties?

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Cassidy: They were caught by surprise just as much as therest of us by events of the past decade. Their overall requirementshave become stricter, causing panic from multifamilyowners.

|

The government-sponsored enterprise also will not accept intoits network multifamily properties with policies that limitor exclude from coverage natural causes of damages such as flood,hail, hurricanes and wind. Loss of rental income as a result of thebefore mentioned perils has become one of the most sought aftercoverages. The cost to add this specific item is one of the mostexpensive for owners. Freddie Mac has similar requirements.

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GlobeSt.com: Aren't those kinds of coverages to beexpected even though we have not had a major terrorist attack like9/11 or a hurricane like Wilma in more than a decade?

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Seacat: First, owners are having trouble finding standardpolicies that include these provisions, for a reasonable price. Ontop of the overall expense for the added coverage, this can be avery time-consuming exercise. Therefore, national and localproprietary programs are becoming more common and the level ofinterest has risen for property owners. (Willyour insurance cover hurricane damage if South Florida getshit?)

|

Find out what else to do in the wake of the storm and why you may need a hurricane lawyer.

|

GlobeSt.com: Fannie Mae and Freddie Mac arethe biggest financers of multifamily housing. But there must bealternatives.

|

Cassidy: Yes, but we have found that lenders providingfinancing for private portfolios are adopting similar rules, givingowners and buyers fewer ways to avoid the requirements. And mostbanks are making it harder to meet the insurance requirements.

|

Evan Seacat, a senior director at Franklin Street

|

MIAMI—Owners and buyers of multifamily housing areexperiencing sticker shock when they refinance, sell or purchaseproperties. Insurance premiums have jumped as much as 25% becauseof the broadened insurance requirements set forth by lenders.

|

GlobeSt.com caught up with Ryan Cassidy and EvanSeacat, both senior directors at Franklin Street InsuranceServices, for a deeper understanding of why lenders havechanged their standards and what owners and buyers can expect inpart one of this exclusive interview. Stay tuned or part two, inwhich the duo will discuss how changing lender practices haveimpacted the market.

|

GlobeSt.com: What caused originators andbuyers of multifamily mortgages to change insurance requirements onmultifamily properties?

|

Cassidy: They were caught by surprise just as much as therest of us by events of the past decade. Their overall requirementshave become stricter, causing panic from multifamilyowners.

|

The government-sponsored enterprise also will not accept intoits network multifamily properties with policies that limitor exclude from coverage natural causes of damages such as flood,hail, hurricanes and wind. Loss of rental income as a result of thebefore mentioned perils has become one of the most sought aftercoverages. The cost to add this specific item is one of the mostexpensive for owners. Freddie Mac has similar requirements.

|

GlobeSt.com: Aren't those kinds of coverages to beexpected even though we have not had a major terrorist attack like9/11 or a hurricane like Wilma in more than a decade?

|

Seacat: First, owners are having trouble finding standardpolicies that include these provisions, for a reasonable price. Ontop of the overall expense for the added coverage, this can be avery time-consuming exercise. Therefore, national and localproprietary programs are becoming more common and the level ofinterest has risen for property owners. (Willyour insurance cover hurricane damage if South Florida getshit?)

|

Find out what else to do in the wake of the storm and why you may need a hurricane lawyer.

|

GlobeSt.com: Fannie Mae and Freddie Mac arethe biggest financers of multifamily housing. But there must bealternatives.

|

Cassidy: Yes, but we have found that lenders providingfinancing for private portfolios are adopting similar rules, givingowners and buyers fewer ways to avoid the requirements. And mostbanks are making it harder to meet the insurance requirements.

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