MIAMI – Sept. 22, 2017 – The impact of the recent hurricanes Harvey and Irma on mortgages could be worse than predicted, according to new estimates from Jacksonville-based Black Knight Financial Services.
Black Knight data suggests that as many as 300,000 borrowers in Houston could become delinquent on their loans, and 160,000 could become seriously delinquent (more than 90 days past due) once banks initiate foreclosure proceedings.
In Florida, the sheer volume of homes hit by Hurricane Irma will likely cause an increase in mortgage delinquencies, though any comparison to Katrina won’t work because of the different natures of the storms. Florida did not see sustained flooding, although there was considerable wind damage, especially in the Keys.
There are 2.08 million mortgaged properties in Irma-related FEMA disaster areas – more than four times that of Katrina and twice as many as Harvey. Total unpaid mortgage balances for Irma areas are $370 billion.
If the correlation to Katrina worked, there could have been half a million mortgage delinquencies in Florida; but, again, the storms were different. Florida borrowers likely have more insurance and less exposure to loss, but for those homes with the most damage, homeowners will be making the same calculation.
Another issue in Florida is that the housing market is still recovering from the foreclosure crisis.
Five percent of Florida borrowers still owe more on their mortgages than their homes are worth, and an additional 5 percent have very little equity in their homes.
It’s too early to predict what these homeowners will do if their home is now damaged and underwater, but at least a marginal spike in foreclosures is likely.
Source: CNBC.com (09/13/17) Olick, Diana
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