Lenders Called to Arms to Diminish Mold Problem

[Guest guest]

Lenders Called to Arms to Diminish Mold Problem

November 10, 2004

By Suzann D. Silverman, Editor-in-Chief

http://www.cpnonline.com/cpn/article_display.jsp?

vnu_content_id=1000717195

Like mold itself, its effect on real estate just will not go away.

While a federal study in late May found no evidence it causes the

types of health problems alleged in lawsuits in the past few years

and a recent court ruling found in favor of Equity Residential, the

property owner, a new survey by the Mortgage Bankers Association

found developers and lenders still concerned--and for good reason.

" If people are focused on the health issues, I don't think it's an

appropriate place to be focused. The real issue is what is my

property value's health, " said , founder of the

Environmental Assurance Group and a member of the MBA's mold task

force.

Last year, he cited, third-party settlements averaged $1.7 million.

And the issue can be even bigger than such claims and cleanup costs,

which themselves average $11 million (first-party settlements last

year ran in the range of half a million dollars). Because mold can

be impossible to completely eradicate, " I know people who have

handed over the keys and the lender's in a default situation and the

lender won't even take the property back, " he said.

Indeed, according to the survey's findings, 75 percent of the 40

lenders and developers polled have heard of a party backing out of a

deal because of mold problems, and more than half listed mold by far

as the type of environmental contamination they fear most. In

addition, more than half knew of mold problems that caused a

revaluing of a transaction.

Yet the situation can be easily improved, said. " We're doing

nothing to assess this, especially during new construction, " he

noted. But close to 90 percent of the risk of mold infiltration can

be avoided by doing an assessment and ensuring use of mold-resistant

building products during new construction and redevelopment.

If lenders were to demand such steps, he predicted, the insurance

companies would once again cover mold under their property and

casualty provisions within two years.

[Guest guest]

--- In , " tigerpaw2c " <tigerpaw2C@n...>

wrote:

>

> Lenders Called to Arms to Diminish Mold Problem

> " If people are focused on the health issues, I don't think it's an

> appropriate place to be focused. The real issue is what is my

> property value's health, " said , founder of the

> Environmental Assurance Group and a member of the MBA's mold task

> force.

Nice guy. At least he's acknowledging the need to cover his industry.

The brute financial force of the lending market is probably more apt

to get action from this administration than the plight of a few

hundred thousand broke, debilitated people.

Lee

[Guest guest]

--- In , " tigerpaw2c " <tigerpaw2C@n...>

wrote:

>

> Lenders Called to Arms to Diminish Mold Problem

> " If people are focused on the health issues, I don't think it's an

> appropriate place to be focused. The real issue is what is my

> property value's health, " said , founder of the

> Environmental Assurance Group and a member of the MBA's mold task

> force.

Nice guy. At least he's acknowledging the need to cover his industry.

The brute financial force of the lending market is probably more apt

to get action from this administration than the plight of a few

hundred thousand broke, debilitated people.

Lee