By Clyde Noel

The Silicon Valley Association of Realtors tour meetings discuss a variety of subjects. Jimmy Kang opened last Friday’s meeting with a discussion of the latest mortgage rates offered by Wells Fargo Home Mortgage.

“It’s deja vu. Rates haven’t been this low in 40 years,” Kang said. “For a conforming 30-year loan it’s 5.25 percent, and 15-year conforming is 4.875 percent, with jumbos comparable.”

The association’s Los Altos/Mountain View district had a recent “bowling for charity” event, and Josie Gambera, co-chairwoman of the community outreach district board, presented Executive Director Tom Myers of the Community Services Agency with a check for $2,800 at the meeting.

“This will sure come in handy,” Myers said. “This is needed more than ever this year because our client load is up 46 percent and our revenues are down more than 10 percent.”

The main speaker for the breakfast meeting was Tempe Javitz of State Farm Insurance, who said getting insurance on a new home is now a whole new ballgame.

“The 1990s were not a good era for insurance companies because of natural disasters,” Javitz said. “From 1990 to 2002 more than $110 billion was paid in claims. Then came 9/11, and that was $40 billion.”

Javitz mentioned that companies in the background, called reinsurance companies, were also hurt — and that has affected us here.

Mold is one of the problems that features prominently in homeowner insurance claims. It started in Texas, with people there claiming it caused allergic reactions. State Farm paid out more than $1 billion during 2001 on mold-related claims.

“Why are rates going up?” Javitz asked. “In California, 40 percent of all the claims are water- and mold-related. In old houses built 40-50 years ago, it’s old plumbing. But with houses built after 1988, they are too tight and can’t breathe, which causes mold.”

Insurance companies are nervous about selling insurance on new homes. They check the history of the home on CLUE (Comprehensive Loss Underwriting Exchange) to find out exactly where the house is located and what claims have been made against the property.

“What’s going to happen on home insurance is the same as is happening on auto insurance,” Javitz said. “Get a ticket, and up go the rates. Make a claim on your homeowner insurance, up go the rates. Because it’s all on the CLUE report, which goes back for three years’ entries.”

The California Department of Insurance is experiencing a fourfold increase in formal complaints from consumers regarding homeowner insurance issues in nonrenewal of coverage.

As of March 2003, formal complaints regarding homeowner insurance nonrenewal and the CLUE database exceeded last year’s by more than 100 a month.

Javitz had this advice for homeowners: “Get a high deductible, and don’t make claims.”