Expected Increase In Foreclosures Due To Hurricane Irma

Last updated on: May 24, 2022

Natural disasters don’t just cause damage to life and property, but they can also be a substantial financial burden. Jobs are lost, valuable assets are destroyed, businesses are ruined, and people endure a lot of financial loss in affected areas. That naturally leads to defaults in mortgage payments until people can recover enough to be able to pay essential expenses.

The extensive damage and the additional expenses will cause a significant number of people to simply walk away or claim bankruptcy. Hurricane Harvey caused extensive damage to Houston and a large portion of the damage was attributed to the flooding. Hurricane Irma was different because it was primarily a wind storm.

The crisis in Florida.

The crisis in Florida is a little more complicated than the crisis in Houston simply because there are fewer mortgaged properties in Houston FEMA disaster areas than Florida FEMA disaster areas. An estimated 2.08 million mortgaged properties exist in the Florida disaster areas. This number is four times that of Katrina and two times that of Harvey. This means that are the more people likely to default in this region.

One of biggest advantages Florida has over the Houston is the number of homeowners with sufficient flood insurance. The homeowners have less exposure to loss and better insurance coverage that provides them the financial stability needed to rebuild their homes and pay mortgages down the line.

However, if the damage to the property is too extensive, the homeowners will choose to walk away as well. The Florida real estate market is still plagued with the foreclosure crisis. Around 5% of the homeowners still have loans that cost more than their home’s value. An additional 5% have little to no equity in their home to borrow money against, which makes their financial situation dire.

As the real estate market still hasn’t recovered completely, the value of homes in disaster areas are low. Even before Irma made landfall, the housing prices in Fort Myers were 29% below the peak prices during the housing boom.

The total unpaid mortgage balance in Florida is around $370 billion and it’s possible for lenders to see nearly 500,000 mortgage delinquencies in this region. While some Federal aid is expected and flood insurance will help, lenders will still face significant losses.

However, lenders do have good loss-mitigation programs in place because of their experience with the foreclosure crisis. In many cases, they’re more willing to offer homeowners time and assistance to catch up with the payments. As foreclosure can expensive for the lender, they will want to try to avoid it if possible.

If you have suffered financially as a result of Hurricane Irma and require mortgage assistance, the foreclosure lawyers at Charlip Law Group, LC would be happy to assist you. With over 35 years of experience and as a Board Certified Civil Trial Lawyer, David H Charlp, B.C.S. and his team have been successfully assisting homeowners facing foreclosure and would like to discuss the details of your case with you. Call us today.

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