$2 Million Said Needed to Test Chinese Drywall

Tampa, FL-Lawmakers have requested that at least $2 million in emergency funding from the House Appropriations Committee be provided to federal agencies in order to ensure they have the resources to complete the crucial testing of Chinese drywall.

According to Safeguard Properties, the study will look at the presence in residential properties with drywall that was imported from China between 2004 and 2007. It requires these agencies to study the availability of property insurance for homes where Chinese drywall is present.

"Chinese drywall continues to be a hot-button issue throughout the Southeast," said Robert Klein, founder and chief executive officer of Safeguard Properties. "Recent legislative activity seeks to investigate and address concerns pertaining to this issue."

In a letter sent to the Environmental Protection Agency and Centers for Disease Control and Prevention, Reps. Robert Wexler, D-Fla., and Mario Diaz-Balart, R-Fla., urged the agencies to act quickly in testing and determining the health and safety risks posed by Chinese drywall.

Hearings have been held to discuss the issue of tainted drywall, tied to extensive corrosion in hundreds of homes in Florida and elsewhere, and blamed by many homeowners for health problems, according to the company.

The potential scope of the Chinese drywall problem could be huge. A recent Herald-Tribune analysis of shipping records found that more than 550 million pounds of Chinese drywall entered the country through more than a dozen U.S. ports since 2006, enough to build 60,000 average-sized homes.

"We have seen this to date from the perspective of increasing claims being made, both state and federal regulators seeking ways to regulate, protect consumers and also determine responsibility and liability for the damages caused by Chinese drywall," said Mr. Klein. "The first lawsuits regarding insurance coverage for these claims are starting to move through the courts and more could be ahead."

The topic of drywall came up about a year ago for Mortgage Contracting Services, with headquarters here. The company is helping lenders and servicers mitigate the problem locally and nationally.

As far as being able to service properties and maintain them, MCS has the ability to remediate drywall or do drywall inspections, said Elspeth Spransy, assistant vice president of vendor management.

"The problem can affect any property built after 2001. This could be a national issue, especially after the major hurricanes in 2004. We had three subsequent hurricanes in a row. Building materials were in short supply and the U.S. needed to get supplies elsewhere.

"A lot of the drywall that we're dealing with or can deal with is from China and also from Germany," Ms. Spransy said.

"Of course the coastal areas are heavily affected, but this can come up anywhere."

It's an evolving focus, she says, and many asset managers are simply preparing for it now.

MCS is able to perform a specific testing protocol where the vendor checks to see if the toxic drywall exists. They are able to give asset managers some different options to consider remediation or not. That's the big step where the process becomes more involved.

"Immediately, we want to remove the drywall completely. But after that we question the residual affects of what was in the house.

"We look to see what other objects inside the house were affected, especially metals or anything inside the walls. We have a process where we are able to try and neutralize the residual affects within the building design."

While lenders might not be able to technically tie certain health affects directly to the drywall, there are known associations such as a lot of respiratory issues, which is the largest concern right now, she says.

In property preservation the goal is to combat any type of preservation issue the industry faces. The topic of Chinese drywall is a big one, adds Ms. Spransy.

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