Hurricane Harvey swept through South Texas and Louisiana last week, bringing an unprecedented amount of rain and flooding with it.
Now, Black Knight Financial Services predicts the mortgage industry could see up to 300,000 new delinquencies as a result of the storm, with 160,000 borrowers becoming seriously past due.
Before the storm hit, Fannie Mae and Freddie Mac announced they were suspending foreclosures and evictions in wake of the hurricane.
“Thankfully, Fannie Mae, Freddie Mac and the Federal Housing Administration have all announced temporary moratoria on evictions and foreclosure sales in Harvey-related disaster areas,” said Ben Graboske, Black Knight Data and Analytics executive vice president. “With these three organizations accounting for nearly 900,000 of mortgaged properties, the moratoria should help temper the negative effects.”
However, this action, and that of other financial industries who stepped up to help in the hurricane’s wake, may not be enough to keep all borrowers out of delinquencies. Black Knight explained 1.18 million mortgaged properties lie within the FEMA-designated disaster area.
For comparison, the Harvey-related disaster area contains twice as many mortgaged properties as those connected to Hurricane Katrina in 2005, and carried nearly four times the unpaid principal balance at $179 billion. After Katrina hit, mortgage delinquencies jumped 25 percentage points to peak at more than 34%.
“Although the situation around Hurricane Harvey continues to evolve, millions of American lives have already been impacted by the storm and immense flooding,” Graboske said. “For many, their struggles are just beginning.”
Ranking Member of the House Committee on Financial Services, Maxine Waters, D-Calif. explained the severity of the hurricane.
“On August 26, Hurricane Harvey began a path of unprecedented destruction across Southeast Texas,” Waters said. “The historic levels of rainfall were so extraordinary that the National Weather Service had to add new colors to its map graphics just to record it.”
“As of August 30, it was estimated that 24.5 trillion gallons of water had been dumped over Texas and Louisiana,” she said. “Harvey is now being called the most extreme rain event in United States history.”
In a recent interview, U.S. Department of Housing and Urban Development Secretary Ben Carson explained the recovery from Hurricane Harvey will take time.