FZC Offers Flood Zone Correction Services
Flood Zone Corr-ection, the nation's first flood zone correction company, has formed an alliance that will have FZC providing the Willis Group with flood zone correction services for U.S. real estate assets owned and operated by Willis' clients.
Dan Freudenthal, president of FZC, said the alliance with the Willis Group is the first of several that are in the works to market his company's service to property owners through insurance brokerages. The Willis Group's clients are mostly commercial mortgage owners and borrowers.
Across the country, property owners purchase 4.4 million flood insurance policies through the National Flood Insurance Program at a cost of nearly $2 billion every year.
Flood insurance requirements imposed by mortgage companies under a federal requirement are the basis for the vast majority of these policies and premiums.
But FZC says the process of flood zone correction determinations on residential and commercial properties can increase property values and save money by eliminating unwarranted flood insurance requirements.
Mr. Freudenthal told MSN that instant flood zone determinations made by overlaying digital maps on the government's flood zone hazard maps are efficient but prone to error.
"Only about 5% of buildings in the country lie in a high-risk flood zone," he noted. Rather than automatically assigning a flood insurance requirement to those properties, owners and lenders should view a determination that a building is in a special flood hazard zone as a call for further investigation.
Even if a building is in a special flood hazard zone, the building's construction may include mitigation techniques that warrant taking it off the hazard list, he said. Much of FZC's business has come from working with FEMA to reduce the hazard status on these buildings, especially apartment complexes. Many buildings constructed in flood hazard areas since 1968 have included construction techniques that protect the structure from damage in a "100 year" storm envisioned by the National Flood Insurance Program.
That, in turn, eliminates the requirement to buy flood insurance as a condition for obtaining, refinancing or maintaining a mortgage loan, he noted. But it also reduces insurance premiums for the property owner and increases the market value of the property, Mr. Freudenthal said.
For commercial real estate owners, successful flood zone correction delivers up to a 100% annual return on investment and up to 1,600% return on investment at the time of disposition or refinancing by capitalizing the savings as new earnings, the company said.
Copyright 2005 Thomson Media Inc. All Rights Reserved. http://www.thomsonmedia.com http://www.mortgageservicingnews.com