[StBernard] Baker Plan in Flux

[Westley Annis]

Jer,

I am apparently interpreting the Baker bill differently than you.  In the 
scenario you presented a house of say $120,000 value pre-Katrina minus the 
$55,000 insurance proceeds leaves you with equity of $65,000.  I read the 
Baker bill to offer you 60% of that remaining equity value or an offer of 
$39,000 to buy his place.  That means he would get $94,000 total return on 
his $120,000 investment even though he did NOT purchase enough flood 
insurance to cover his losses.  That would actually mean your father would 
get about 78% return when you include insurance and the Baker bill.  He 
could either keep his property and rebuild with insurance money (probably 
needing to add to that amount depending on the actual state of his house) or

consider himself lucky to receive an offer to take the money and walk away 
letting the plan administrators have the headache of reselling or trying to 
redevelop the property.

Your interpretation of the Baker bill only gives your father 60% of the 
$120,000 (or $72,000) minus the $55,000 insurance proceeds leaving him to 
gain only $17,000 more with the Baker plan.  Still it's not that bad of a 
deal in my opinion.   Could he really sell his lot (with or without a 
damaged house on it) for that much more than $17,000 on his own given all 
the properties people seem to want to unload these days?  The Baker plan 
gives you a guarenteed buyer with no hassles.

If insurance was not considered, your father would get $55,000 from 
insurance and still get $72,000 (60% of the $120,000) for a grand total of 
$127,000.  While we all want our friends and family members to receive great

benefits, logically that would seem very unfair to give him a profit on his 
house courtesy of the government.  Additionally, the plan administrators now

have the added expense of trying to fix the house, trying to sell the land 
at a cost above market to offset the price they already paid out to your 
father, or absorbing the financial burden as a loss.  The Baker plan is not 
intended to make anyone come out better  than their pre-Katrina value. I 
could be taking a different slant on the wording, but this is how I 
understand it to be with insurance proceeds issue.

Unfortunately, there are probably a million different scenarios that you 
could analyze and come up with in which some individuals would not 
necessarily get the best deal.  Hopefully a plan will get passed that offers

financial relief of a decent level to the maximum amount of people.  Jer, I 
hope your father gets the chance to even have the option of the Baker bill 
as one of his choices.

I am curious to hear if anyone interpreted the bill differently than either 
of us.

--hope the numbers are correct--sorry it is so long again---
KM