The second disaster after the hurricanes: foreclosures

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Texas, Florida and the U.S. territory of Puerto Rico were hit hardest by hurricanes Harvey, Irma and Maria. Lenders routinely offer grace periods and forbearances in cases of national disaster, but time is running out.

4.8 million homes with mortgages were in the path of the three storms, with aggregate balances of $746 billion. 30-day delinquencies have risen by 67% in those areas affected by Hurricane Harvey, for example.

Mortgage giants Fannie Mae and Freddie Mac instituted a 3-month suspension of foreclosure sales and have agreed to work out forbearance plans to delay payments by up to a year, but lenders often don’t release insurance payments until the homeowner has lined up a contractor to make repairs. With the scale of the disaster, there are months-long waits even for contractors’ estimates.

Many whose homes have been severely damaged or destroyed are finding that payments from FEMA for temporary housing (typically a hotel or motel) are coming to an end—at the same time that lenders’ forbearance periods stop.

A coalition of consumer advocacy groups has been formed to petition housing agencies—the Federal Housing Finance Agency, HUD, Fannie Mae and Freddie Mac and the Consumer Financial Protection Bureau—to provide relief for distressed homeowners. That relief would come if the form of longer forbearance periods (up to two years) and a recommendation that loan servicers disburse up to $10,000 to homeowners immediately to expedite repairs on their homes.

Puerto Rico is a special case. Unlike the other American Citizens living on the mainland and Hawaii, more home mortgages are held by private investors and banks—more than 40%. The requested accommodations do not cover these kinds of loans. Puerto Rico has long been financially distressed, with a mortgage delinquency rate three times the national average.

Banco Popular, one of the largest banks on the island, is offering only a 3-month forbearance for affected homeowners. The bank has reported a $70 million loss reserve increase, owing to a large number of mortgages that are delinquent and expected to go into foreclosure.

Source: TBWS

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

Daniel Harwood

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Cell: 816-462-5390

Email: daniel.t.harwood@gmail.com

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Daniel Harwood

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License:

Cell: 816-462-5390


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