Months before a buyer paid $5.5 million for a house perched above Cape Cod Bay, a local newspaper described it as “endangered.”
The foundation sat less than 14 feet from the edge of a Wellfleet bluff that had been retreating at a rate of 6 to 7 feet per year. At that pace, the house was on track to collapse into the bay well before a standard home loan matured.
Nevertheless, John G. Bonomi Jr. was able to secure a $3.85 million mortgage to buy the home in November 2021. Less than four years later, Bonomi was forced to demolish the house before it could fall into the bay.
He’s now asking a federal court to void the mortgage, arguing that he lacked the mental capacity to enter the agreement and that the loan was unconscionable.
It “strains credulity,” the complaint argues, to believe the bank did not understand that the property could soon become “worthless as collateral.”
His lender, JPMorganChase, denies the allegations and says it acted “at all times in good faith and in accordance with reasonable commercial standards.”
Bonomi’s allegations have not been proven, but the published rules governing conventional mortgage lending appraisals point to a possibility that is both less dramatic and more consequential than a lender missing an obvious danger.
The erosion could have been identified, documented, and incorporated into the appraisal—and the house could still have supported a multimillion-dollar loan.
The view retained value as the bluff disappeared
Di Jin, a marine resource economist and senior scientist at the Woods Hole Oceanographic Institution, has studied how environmental conditions affect coastal property values.
What makes waterfront property difficult to price, he tells Realtor.com®, is that the amenity buyers value most is inseparable from hazard.
“One thing is very clear. The home with the ocean view, you have a very positive effect,” he says of the relationship between home prices and proximity to the ocean.
A first-row property can offer an unobstructed view, water access, and scarcity that an inland house just can’t. But those benefits also hide what Jin calls “the flood risk or the whole coastal hazard.”
“They are very difficult to separate,” he says.
That impact is plain enough to see throughout Cape Cod. A 2018 report from the Union of Concerned Scientists estimated 10,000 homes were at risk of chronic flooding by 2100.
And yet, the average median listing price in Wellfleet rose from roughly $675,000 in 2019 to about $1.53 million in 2024, an increase of 126%, according to Realtor.com data. In nearby Provincetown, the figure climbed from about $780,000 to nearly $1.68 million over the same period.
It’s an important distinction for the Bonomi case, because demand—not life expectancy of a home—is what drives an appraisal.
Comparable sales can support a high valuation even when the properties being compared share the same danger, according to Fannie Mae’s Selling Guide. If buyers continue paying millions for exposed waterfront homes, the market evidence may say that the hazard has not eliminated their present value.
In these cases, appraisers are expected to use sales and listings from the same affected area because those transactions should capture any loss in value—or show “no buyer resistance to the hazard.” Only in rare cases, Fannie Mae says, would a hazard make a mortgage ineligible because it is so serious or newly discovered that no reliable comparable market data exists.
Importantly, though, these rules didn’t necessarily govern Bonomi’s loan. At a sum of $3.85 million, his loan was far above the conforming loan limit and may have remained in his bank’s portfolio or followed separate jumbo-loan standards.
Even so, Fannie Mae’s rules show how the country’s dominant mortgage institution expects hazards to enter the appraisal process: principally through their demonstrated effect on current value and marketability.
No one had to say how long the house would last
But the risk to the Bonomi house was unusually well documented.
The original owners, Mark and Barbara Blasch, were warned about the likelihood of catastrophic erosion when they sought permits to build the house in 2010. Beginning in 2013, they deposited thousands of cubic yards of sacrificial sand below the property, and in 2018 they sought permission to build a 241-foot stone revetment to keep the bank from retreating. The town rejected that proposal, and the Blasches were still challenging the decision when they listed the house for sale in 2021.
“Erosion can often be seen as a terrible thing for buyers and homeowners, but it’s a critical part of maintaining a healthy coastal ecosystem,” Bryan McCormack, a coastal processes specialist with WHOI Sea Grant and Cape Cod Cooperative Extension, tells Realtor.com.
“All of the sediment that gets eroded goes to feeding downdrift beaches and coastal habitats. When the shoreline is armored, we interrupt this natural process, often leading to sediment-starved beaches and significant adverse impacts to the natural system.”
The Massachusetts Office of Coastal Zone Management‘s viewer places the long-term erosion rate near the property at roughly 2.5 to 3 feet per year. But that average concealed periods of much faster retreat.
“In a report sent to the Town of Wellfleet in 2024, I calculated erosion rates that were up to double that of the published, long-term numbers,” McCormack adds.
“The highest erosion rates came in the early to mid-2010s,” he says. “These accelerated rates were likely driven by intense storms.”
The same process has already forced the removal of other homes along the Outer Cape. In February, the Cape Cod National Seashore demolished the Bartlett House in Eastham after erosion left less than 10 feet of bluff between the cottage and the ocean.
However well documented the specific or larger risk was, though, Fannie Mae explicitly says a typical residential appraiser is neither “expected nor required” to be an environmental hazard expert.
The appraiser’s role is to report the condition and assess what it does to the property’s value and marketability. The lender decides whether additional inspections are necessary and whether the property provides adequate security for the loan.
Fannie Mae’s guidance also says appraisers are not required to report a property’s remaining economic life. Even when they do, lenders “do not need to consider” it, provided any related deficiencies are addressed elsewhere in the appraisal.
Bonomi’s lawsuit alleges that JPMorganChase commissioned two appraisals and “specifically demanded” documentation from the engineering company working to slow the erosion. Realtor.com was unable to obtain those materials by the time of publication.
Flood maps do not measure a disappearing bluff
Even the process of flood review, which provides another vital safeguard in coastal lending, may have missed the key risk facing the home.
FEMA says some storm-related erosion of sandy dunes is incorporated into its coastal flood analysis, but long-term bluff erosion is not.
“No, bluff failure and long-term erosional processes are not included,” the agency states. Because bluff collapse is episodic, FEMA says, a constant future rate cannot simply be assumed in the analysis.
A property’s flood designation therefore doesn’t establish how quickly an exposed bank is retreating or how many years remain before a house must be moved or demolished.
The mortgage process could confirm the property’s flood zone and require the appropriate flood insurance without ever producing an estimate of the bluff’s remaining life.
Insurance could cover the house without covering its central threat
Insurance presents a similar mismatch. Lenders generally require a homeowners policy before issuing a mortgage, but on Cape Cod and the Islands, obtaining that coverage often means turning to the state’s insurer of last resort.
About 4 in 10 homes in the region were insured through the Massachusetts FAIR Plan in 2024, up from 33% a year earlier—the highest share since 2017, according to an analysis by Commonwealth Beacon. The program provides basic property coverage to owners who cannot obtain insurance in the private market.
That backstop can allow a property to remain insurable for mortgage purposes even as private carriers retreat from the coast, but securing a policy doesn’t mean that every threat to the collateral is covered.
Standard homeowners policies exclude flooding, while federal flood insurance covers only events that satisfy the policy’s definition of a flood. The National Flood Insurance Program also excludes losses caused by several forms of earth movement, including landslides, destabilization, and “gradual erosion,” even when water causes the movement. Narrower coverage exists for certain sudden erosion-related collapses caused by waves or currents exceeding anticipated cyclical levels.
That language is important in Bonomi’s case because the house wasn’t destroyed by a single storm. Instead, it remained standing as the bluff beneath it steadily narrowed, until demolition became necessary to prevent the structure from falling into the bay.
And that sequence is playing out across the Outer Cape. Just four months after the Bartlett House was demolished, two more houses above Nauset Light Beach were removed after the retreating bluff reached the structures.
The available record does not establish what insurance Bonomi carried, whether he obtained coverage through the FAIR Plan, or whether he submitted a claim related to the demolition. His complaint says he spent approximately $250,000 removing the house and more than $500,000 on plantings, sacrificial sand, and replacement coir structures intended to preserve the bluff. It does not allege that insurance reimbursed those expenses.
