As is to be expected, Hurricane Harvey, which devastated the greater Houston area, caused a slight jump in mortgage delinquencies in August.
According to Black Knight’s monthly First Look report, more than 6,700 new 30-day delinquencies can be attributed to the storm.
In addition, about another 1,000 borrowers who were already 30-days past due on their mortgage missed a second consecutive payment in August as a result of the storm.
However, the mortgage software, data and analytics firm notes that the full impact of the storm won’t be known until October, when its September First Look report comes out. That report will also show the impact, if any, on delinquencies from Hurricane Irma, which hit Florida on Sept. 10.
It should be noted that government-sponsored enterprises Fannie Mae and Freddie Mac have disaster relief plans in place giving borrowers with properties located in FEMA-declared disaster areas forbearance, provided that they are eligible for FEMA Individual Assistance.
According to the First Look report for August, the total U.S. loan delinquency rate (loans 30 or more days past due, but not in foreclosure) was 3.93%, an increase of 0.72% compared with July but down 7.27% compared with August 2016.
A little over 2 million properties were delinquent, an increase of about 17,000 compared with the previous month but down about 148,000 compared with a year earlier.
About 557,000 properties were seriously delinquent (90 days or more past due but not in foreclosure) an increase of 2,000 compared with July but down about 112,000 compared with August 2016.
The total U.S. foreclosure pre-sale inventory rate stood at 0.76%, a decrease of 3.27% compared with July and a decrease of 27.23% compared with August 2016.
There were about 385,000 homes in the foreclosure inventory, a decrease of 13,000 compared with July and down 142,000 compared with August 2016.
There were about 54,700 foreclosure starts in August, an increase of 2.63% but a decrease of 20.49% compared with August of last year.
The monthly prepayment rate was 1.13%, an increase of 11.47% compared with the previous m month but a decrease of 32.23% compared with a year earlier.
Storms Could Potentially Cause Spike in Delinquencies
Earlier this month, Black Knight published report estimating that up to 1.8 million mortgaged properties in Texas could potentially be impacted by Harvey. That’s twice as many mortgaged properties as were impacted by Hurricane Katrina in 2005, carrying nearly four times the unpaid principal balance.
Provided that the impact of Harvey on delinquencies is similar to that of Katrina, up to 300,000 borrowers could go 30 days past due and up to 160,000 could go 90 or more days past due, Black Knight says in a Sept. 8 report.
“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,” Ben Graboske, executive vice president of Black Knight Data and Analytics, says in a statement. “With these three organizations accounting for nearly 900,000 of mortgaged properties, the moratoria should help temper the negative effects. Forbearance plans will help as well, though interest on the mortgage will continue to accrue under any of these efforts.
“Still, there are 1.18 million mortgaged properties in Harvey-related disaster areas, more than twice as many as were hit by Hurricane Katrina, with nearly four times the unpaid principal balance,” he adds. “This will be a long-term recovery. If the Harvey-related disaster areas follow the same trajectory as those hit by Katrina, within four months we could be looking at as many as 160,000 borrowers falling 90 or more days past due on their mortgages.”
In addition, Black Knight estimates that as many as 3.1 million mortgaged properties in Florida could be impacted by Irma – nearly three times as many impacted by Harvey and nearly seven times as many impacted by Katrina.
As a result of Irma, up to 300,000 borrowers in Florida could miss at least one mortgage payment and up to 160,000 could end up becoming 90 days or more past due – about the same levels of delinquency caused by Harvey, but spread across more properties and a much larger geographic area.
