Financing in San Francisco>Question Details

Everdoer, Home Owner in San Francisco, CA

What happens to my mortgage if I lose my home in an earthquake?

Asked by Everdoer, San Francisco, CA Tue Jan 24, 2012

I say "if I lose my home", though everyone tells me its more of a "when I lose my home". What happens to my mortgage, and how else should I legally prepare?

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Christina Hayes’ answer
Earthquakes are covered under your homeowners insurance, in any case talk to your insurance agent to be sure the amount of earthquake coverage. If you have the coverage. For instance, in Florida, homeowners insurance doesn't cover damage from hurricanes or flood and second and third policies are needed for windstorm and flood. So be sure you are covered. The only one who can answer this question is your insurance agency.

Best of Luck;

Christina Solorzano;
CEO & SR Credit Repair Specialist at
Everlasting Credit Repair
Ex-Mortgage Banker of more than 10 years.
1 vote Thank Flag Link Sun Apr 28, 2013
Who is everyone? I don't think you can go through life thinking like that. SF with stood the 1989 earthquake and will continue to do so.

But to answer your question, if you didn't take out earthquake insurance, then you will still be responsible for your mortgage, unless the goverment steps in.

Ask "everyone" if they took out earthquake insurance. I doubt it.


2 votes Thank Flag Link Tue Jan 24, 2012
In line with the answers already in place, having a good insurance policy that covers earthquakes is your best option. You are and remain responsible for your mortgage. Earthquake insurance is expensive and may cover only certain aspects. The best preparation for you is to call your insurance company and find out the options.

Feel free to call me at 415-200-7202.
1 vote Thank Flag Link Wed Jan 25, 2012
Well, if you're asking if you still have to pay your mortgage, you have your answer below. But if you just want to know if you have personal liability if the bank forecloses on you, then you may or may not be exposed for deficiency judgment depending on the types of loans you have, i.e. recourse vs. non recourse loans. For non recourse loan like the loan you got when you first purchased the property, you never have to worry about deficiency judgment; so when the earthquake destroys your home, you can just walk away from it and let the bank foreclose. But if you have refis, i.e. recourse loans, you may be on the hook for deficiency.

The answer is the same if some other reaso motivates you to walk away from the loans.
1 vote Thank Flag Link Tue Jan 24, 2012
Sorry, you still owe the amount, less whatever your insurance pays for

Same as if you lose the house to a fire, or a land slide

Astrid Lacitis
Keynote Properties
415 860 0765
1 vote Thank Flag Link Tue Jan 24, 2012
As you can see below, there is a consensus that you'd have to keep paying --- and it is correct. And while this is a very scary proposition, I'd encourage you to take it out of the realm of the unknown and have a conversation with your insurance agent. He/she will explain the coverage options, the cost and anything else you need to know, and then you can weigh the risk of adding earthquake coverage.

For as likely as a seismic event is in our area, the vast majority of homeowners do not carry earthquake coverage.

Rob Spinosa
1 vote Thank Flag Link Tue Jan 24, 2012
Your mortgage stays and you would be expected to make your payments on time.
Your payments would continue while you rebuilt the structure whether you live there or not.
1 vote Thank Flag Link Tue Jan 24, 2012
Jed Lane, Real Estate Pro in San Francisco, CA
Let me state it again, for absolute clarification: Typical California homeowner's insurance does not have earthquake coverage. As a lender (any I have worked for over the past 25 years), we do NOT require earthquake insurance. It is additional coverage that is entirely discretionary on the part of the home owner. @Michael is correct about condos, townhouses and ect. Read the CC & R's of the association. Otherwise, I have never seen earthquake insurance included in a standard homeowner's policy. Clear?
1 vote Thank Flag Link Tue Jan 24, 2012
Most insurance policy's in CA do not automatically cover earthquake (or Floods, for that matter). You can add earthquake converage quite easily; however, it is fairly expensive. Talk with your insurance agent (or several) to get accurate estimates and specific coverages.

If you "lose" you home to an earthquake, you still have a mortgage outstanding. Nothing changes. Now, of course, if there is a declaration of a State or National Disaster, you would be covered by the programs provides by the Federal Government. I cannot speak directly to the coverages, limits or liabllity of any funds derived from the National Disaster Relief Programs. But, you might want to check out some the abysmal help that victims of Katrina have received in New Orleans....the cost of the earthquake insurance may be worth the piece of mind to you and your famility. Best of luck!
1 vote Thank Flag Link Tue Jan 24, 2012
If your home is a condo, tic or pud, check with the hoa's insurance policy. Earthquake insurance is very expensive, but some hoa's do include it in the building's policy. If not, you can get a policy for just your unit or your single family home. Because of the very high cost, many homeowners forgo the earthquake insurance.
1 vote Thank Flag Link Tue Jan 24, 2012
The mortgage continues. You and/or your insurance carrier will have to pay to replace or repair the property. Your mortgage does not go away unless you fully pay it off, do a short sale, the property is foreclosed on, or you finish it off in bankruptcy court.

Oggi Kashi
Broker Associate, Paragon Real Estate Group CA DRE 01844627
All data from sources deemed reliable but subject to errors and omissions, and not warranted.
1 vote Thank Flag Link Tue Jan 24, 2012
The mortgage stays in place.

That's what insurance is for.

Make sure your home is adequately insured (replacement value). And make sure that your insurance covers earthquakes.

It's likely that your lender already has required you to have insurance on the property. But it may not be adequate. (They've required the insurance to protect THEIR interest, not yours.) Check with your insurance agent. It should just be a quick call.

Hope that helps.
1 vote Thank Flag Link Tue Jan 24, 2012
Don Tepper, Real Estate Pro in Burke, VA
generally, if you lost your house in natural disasters like earthquake, you will have to continue pay your mortgage of your house. The mortgage contract is between you and the bank or other financial institution. Legally, you have to continue your responsibility for that mortgage. Unless, you could announce you are bankrupted. You will lost your assets for that. Meanwhile, sometime, the government will offer you some supports to recover your lost. However, for most of countries, especially for these developing countries, never expect about that.
0 votes Thank Flag Link Fri Apr 26, 2013

The debt (your mortgage) would still be your responsibility if you lost your home in an earthquake. You should definitely look into earthquake insurance and make sure your insurance covers you adequately. Depending on your level of concern, you may want to be insured for more than the minimum state requirements. Talk to your current insurance provider for more information.

0 votes Thank Flag Link Sat Apr 21, 2012
You still owe the lender. However, take heart- a big chunk of the value of your home is in the land, not just the structure itself. Not only that, the odds of your home being a total loss are not very high, unless you are on landfill and given the age of your home modern construction methods, such as driving pilings into bed rock, were not used.
0 votes Thank Flag Link Fri Apr 20, 2012
As well described previously, you are on the hook to pay your mortgage to the extent your insurance covers, or doesn't cover the loss.
0 votes Thank Flag Link Fri Apr 20, 2012
Something I heard from my insurance agent. Less than 10% of home owners in San Francisco owns earthquake insurance. The terms seem really bad, you gotta pay 10-15% deductible. A home replacement value of 1 million will cost like 4000 grand a year, which is more than the fire insurance. Also your looking at 100-150k worth of deductibles. So a crack in the wall means your going to fix it yourself.

And even if you have it are you sure they will cover you? Google "katrina insurance claim wrongful denial"

If your lucky they will pay. If your not they can not pay, they can delay, they can take you on a ride. Are you prepared to go through that process?
0 votes Thank Flag Link Fri Apr 20, 2012
Insurance is the key - agree with Richard.

Irina Karan
Beachfront Realty, Inc.
CDPE - Certified Distressed Property Expert
0 votes Thank Flag Link Fri Apr 20, 2012
Insurance is the key - agree with Richard.

Irina Karan
Beachfront Realty, Inc.
CDPE - Certified Distressed Property Expert
0 votes Thank Flag Link Fri Apr 20, 2012
OOPs! I just noticed that I left out the link. You may want to check into this:
0 votes Thank Flag Link Thu Jan 26, 2012
17 years ago I worked for BofA and it was my job to work out something with the borrowers, this was just after the Northridge earthquake. While they were still responsible for the mortgage, we did make special deals help them out. I would get the earth quake insurance.
0 votes Thank Flag Link Thu Jan 26, 2012
Most of the answers below are correct regarding your mortgage obligation. Where most fell short, however, is in the actual insurance coverage that may or may not be available. Much depends on your insurance company and their policy exclusions.

As you know San Francisco has a seismic classification of Zone 4 risk factor which is the highest rating you can get. This doesn't bode well for insurance rates. Here's a link you may want to access for additional information on EQ coverage.

Many insurance companies no longer offer EQ insurance but will cover everything else including fire. So if your home burnt down as a result of an EQ you'd still be covered. If it didn't burn down but was destroyed and you had no EQ coverage you'd be out to lunch and still on the hook with your mortgage.

If you can find an insurance company that will issue a rider for EQ coverage it will be expensive and carry a very large deductable. I carried EQ insurance for a few years but it still had 100k deductable that I would that I would have to absorb so after about five years of pourig that extra money down the drain I finally cancelled the EQ coverage.

Good Luck.
0 votes Thank Flag Link Wed Jan 25, 2012
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