Report: Earthquake Could Hammer CA Home Values

The California housing market, which is still reeling from foreclosures and declining values, now has something new to worry about: what might happen to prices if an earthquake strikes. According to a new report issued by Impact Forecasting LLC and Aon Benfield, only 14% of California homeowners carry earthquake insurance. The report notes that a natural disaster, such as a "great" earthquake in southern California "could send shockwaves throughout the financial and insurance industries." Aon, a reinsurance company, says many mortgagors could walk away "from their damaged homes without repairing them, leaving many homes in foreclosure and forcing the banks to bear the brunt of the loss in capital." California, typically, represents 20% of all residential loans serviced in the U.S. "Thoughts of just how bad this mortgage crisis might be should a significant earthquake occur in the next couple of years have crossed many of our minds," the authors write.