The next great real estate crisis could be the result of inept government lawmaking, according to Tom Thornhill, president of the Louisiana Trial Lawyers Association. In commentary appearing at Seeking Alpha, Thornhill starts off with a doozy:
If you thought the governmental failure to regulate CDOs resulted in a worldwide real estate crash that could have been avoided with proper regulation, you are NOT going to be pleased to know that the new real estate crisis will occur on October 1, 2013.
That culprit? The Biggert Waters Act, which revises the National Flood Insurance Program. According to Thornhill:
The change in the law and regulations of flood insurance under the Biggert-Waters Act impacts heaviest investors in banks, REITS, and commercial real estate, although main street and homeowners stand to suffer huge potential losses when small businesses and hundreds of thousands of home loans in new flood zone designations (made without accurate data to support the designations) cannot be paid and therefore are placed in default.