Hurricane Harvey could have a more destructive impact on the mortgage market in Texas than Katrina did on the Gulf Coast, according to a report out Wednesday.
Real estate data provider Black Knight Financial Services notes that there are twice as many mortgaged properties in Harvey’s disaster area, with nearly four times the unpaid principal balance — the amount homeowners owe — as in the Louisiana and Mississippi counties declared a disaster area in 2005.
Within two months of Hurricane Katrina’s impact in 2005, the number of homeowners who became late on their mortgage payments surged by more than seven percentage points, from about 8% in July 2005 to nearly 16%, Black Knight said.
The number of homeowners who were severely delinquent — late by 90 or more days — nearly tripled.
Of the approximately 1 million mortgaged homes in the Texas disaster area, about 56% have mortgages backed by Fannie Mae or Freddie Mac, the giant mortgage financiers, according to Black Knight. If Harvey has an impact on the Texas market similar to Katrina’s, it will mean over 75,000 borrowers will be unable to make a mortgage payment in the next two months, and 45,000 will become seriously delinquent or even face foreclosure in the next four months.
Fannie Mae and Freddie Mac on Tuesday announced they would suspend evictions and foreclosures on homes whose mortgages they own, and work with services to ensure no property-inspection costs resulting from the hurricane are passed on to borrowers. The two enterprises also waived penalties and late fees against borrowers whose homes have been damaged by Harvey.
But both Fannie and Freddie noted that the situation in Texas and the Gulf Coast is still evolving, and much remains uncertain. And as Black Knight wrote in a release, “the human cost of this storm is obviously immense, with millions of American lives being impacted.”
Courtesy of realtor.com and credited to Andrea Riquier
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