Mold Sickens Hurricane Survivors and Mortage Lenders

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Notice that this article says that large amounts of mold are toxic to everyone!

Mold Sickens Hurricane Survivors ... and Mortgage Lenders

October 5, 2005

Financial institutions are falling victim to mold. It's not infecting their

offices, it's

destroying homes and businesses along the Gulf Coast region devastated by

Hurricanes

Katrina and Rita.

In the hot and humid aftermath of the storms, mold has quickly taken over

abandoned

structures, in some cases covering nearly every inch of exposed surfaces. While

a little

mold affects those who are allergic to it, large amounts of mold are toxic to

everyone.

Health officials have warned homeowners not to try to remove the mold

themselves.

Professionals should be hired to clean mold that covers more than ten square

feet (one

square meter), they urged.

" Those [surfaces] that can't be cleaned need to be removed, " said Redd,

chief of the

Air Pollution and Respiratory Health Branch of the U.S. Centers for Disease

Control and

Prevention (CDC).

The effects of the mold are already surfacing in Mississippi, where respiratory

problems

are among the illnesses doctors there are reporting.

The end result is that many buildings that survived the storms relatively intact

have since

been effectively destroyed by mold. The only solution for many mold-infested

buildings is

to knock them down and rebuild.

However, mold damage is not covered by most insurance policies. That means

homeowners aren't likely to be compensated for mold damage, which increases the

likelihood that thousands of homeowners will simply walk away from their ruined

houses.

Indeed, most homeowners who have been evacuated from the region have already

stopped

making mortgage payments. Unless insurers or government agencies step forward to

pay

for rebuilding and replacing ruined homes, it's the mortgage lenders who will be

stuck

with the tab.

" The recent hurricanes have brought the financially catastrophic aspect of the

mold issue

to the forefront, much the same way that 9/11 highlighted terrorism liabilities

for financial

institutions, " said , a mold consultant to mortgage lenders.

" As insurers proceeded to exclude terrorism coverage, they simultaneously built

in mold

exclusions, allowing them to avoid billions of dollars in claims on Katrina and

Rita

damages down the line, " said. " However, those in the lending community

that rely on

healthy real estate loans and the underlying collateral to do business did not

respond

quickly enough to avert the potentially massive consequences of mold damage

caused by

the Gulf Coast hurricanes. "

The consequences could be dire for many mortgage lenders as well as the

investors and

underwriters in the secondary market.

Lenders learn quickly, though. Many are already requiring builders to use new

mold

prevention techniques and mold-resistant building materials in their

construction lending

guidelines.

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