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Delinquent Mortgages In Hurricane Areas?

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Terrel L. Shields

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https://a.msn.com/r/2/AArSFrE?m=en-us
New estimates suggest at least 300,000 borrowers will become delinquent on their loans and 160,000 could become seriously delinquent, that is, more than 90 days past due, when banks initiate foreclosure proceedings. This from Black Knight Financial Services, which compared mortgaged properties in the FEMA-designated disaster areas in Houston to those in Hurricane Katrina, and the resulting delinquencies in the four months following Katrina.​
 

timd354

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https://a.msn.com/r/2/AArSFrE?m=en-us
New estimates suggest at least 300,000 borrowers will become delinquent on their loans and 160,000 could become seriously delinquent, that is, more than 90 days past due, when banks initiate foreclosure proceedings. This from Black Knight Financial Services, which compared mortgaged properties in the FEMA-designated disaster areas in Houston to those in Hurricane Katrina, and the resulting delinquencies in the four months following Katrina.​
There is no doubt that there will be a significant increase in delinquencies in the areas affected by the recent hurricanes. However, based on past history from the flood event in August, 2016 that affected the areas to the east of Baton Rouge, LA, many of those delinquencies will eventually cure. It should also be noted that lenders and the GSE's will give borrowers a grace period of up to 1 year if their property was damaged.
 

AMF13

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It should also be noted that lenders and the GSE's will give borrowers a grace period of up to 1 year if their property was damaged.

They should. Plenty of underwater borrowers got more time in recent years,
and they were not damaged properties.
But, I wouldn't be surprised if they hire a bunch of Snidely Whiplash types to collect.
 

Howard Klahr

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It should also be noted that lenders and the GSE's will give borrowers a grace period of up to 1 year if their property was damaged.
It is mandatory that lenders and servicers have been instructed how to deal with loans located in areas impacted by natural disasters. This is not anything new so let's refrain from spreading false information.
Links just just a sampling of direction for lenders and services to address this topic:
https://www.lexology.com/library/detail.aspx?g=2bff06ac-b977-486e-a039-9bee206ae654

http://miami.cbslocal.com/2017/09/14/hurricane-irma-mortgage-assistance-florida/

https://www.fanniemae.com/content/announcement/ll1706.pdf
 

timd354

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Certified Residential Appraiser
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Maryland
It is mandatory that lenders and servicers have been instructed how to deal with loans located in areas impacted by natural disasters. This is not anything new so let's refrain from spreading false information.
Links just just a sampling of direction for lenders and services to address this topic:
https://www.lexology.com/library/detail.aspx?g=2bff06ac-b977-486e-a039-9bee206ae654

http://miami.cbslocal.com/2017/09/14/hurricane-irma-mortgage-assistance-florida/

https://www.fanniemae.com/content/announcement/ll1706.pdf
From the Fannie announcement:

After the servicer’s review of the facts and circumstances indicates that the property, the borrower’s employment, or the borrower’s income is seriously affected by a disaster event, the servicer is authorized to offer a forbearance plan, and must report a delinquency status code of 9 – Forbearance. The length of the initial forbearance plan is based on whether the servicer has achieved quality right party contact (QRPC):  If the servicer acieved QRPC, then the servicer is authorized to offer an initial forbearance plan up to 6 months.  If the servicer did not achieve QRPC, then the servicer is authorized to offer an initial forbearance plan up to 3 months.

I can tell you from past practice that although the initial forbearance plan is limited to 6 months, servicers have been able to negotiate an extension for another 6 months in major disaster areas for affected borrowers...that undoubtedly will happen again as it simply is in the GSE's best interest to try to allow borrowers to recover and repair the property as opposed to taking back a bunch of flood damaged homes thru foreclosure when the homes have severely diminished value due to the water damage (unfortunately many of the damaged homes were not in a FEMA Special Flood Hazard Area and did not have flood insurance)
 
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Terrel L. Shields

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I suspect if you contracted a new house in FL or Houston today, it would be six months just for them to start repairs.
 

Elliott

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Oregon
They could always pull a new mortgage under Fannie's "No Appraisal" Waiver Program:

©2017 Fannie Mae.
Updated August18,2017

Property Inspection Waiver
Frequently Asked Questions August18, 2017
Property inspection waiver (PIW) is an offer to waive the appraisal for
eligible transactions.


upload_2017-9-15_8-28-34.png
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
They could always pull a new mortgage under Fannie's "No Appraisal" Waiver Program:

©2017 Fannie Mae.
Updated August18,2017

Property Inspection Waiver
Frequently Asked Questions August18, 2017
Property inspection waiver (PIW) is an offer to waive the appraisal for
eligible transactions.


View attachment 33138
Nope. Properties in disaster areas are not eligible for PIW's:

The majority of transactions will not receive a PIW offer, which means they will require an appraisal by a qualified residential appraiser to establish the market value.
The following are not eligible for a PIW offer:

Properties located in a disaster-impacted area
 Construction and construction-to-permanent loans
 Two- to four-unit properties
 Loan casefiles in which the value of the subject property provided to DU is $1,000,000 or greater
 HomeStyle® mortgage products (Renovation and Energy)
 DU Refi Plus™ loan casefiles
 Texas 50(a)6 loans
 Leasehold properties, community land trust homes, or other properties with resale restrictions
 Cooperative units and manufactured homes
 DU loan casefiles that receive an ineligible recommendation
 Loans for which the mortgage insurance provider requires an appraisal
 Loans for which rental income from the subject property is used to qualify

Q13. If a lender receives a PIW offer on a loan casefile, are there situations in which the lender would still need to obtain an appraisal?
Yes. There may be certain situations in which a lender needs to obtain an appraisal, even though a PIW was offered on the loan casefile.
Examples of when an appraisal would need to be obtained include the following:
The lender has reason to believe that fieldwork is warranted based on subsequent events such as a hurricane or other natural disaster

Q14. How does a lender know if a property is located in a disaster-impacted area?
Desktop Underwriter is regularly updated with ZIP Codes impacted by a major disaster as declared by the Federal Emergency Management Administration (FEMA). Fannie Mae may also add areas impacted by other disasters or emergencies at its discretion. Properties located in these areas will not receive Property Inspection Waiver offers through DU. However, DU is not aware of all disasters. In accordance with our PIW policy in Section B4-1.4-10, an appraisal must be ordered if the lender has additional information about the property (such as a disaster in the area) that suggests an appraisal is warranted, even if DU has issued a Property Inspection Waiver.

Q15. What should the lender do if a disaster is declared after the loan closes with a PIW but before the loan has been delivered to Fannie Mae?
The lender makes property-related representations and warranties as of the time it delivers the loan to Fannie Mae. Before delivery of a mortgage loan to Fannie Mae when the property may have been damaged by a disaster, the lender is expected to take prudent and reasonable actions to determine whether the condition of the property may have materially changed. The lender is responsible for determining if an inspection of the property and/or new appraisal is necessary to support its representations. See Section B2-3-05 for full guidance on properties affected by a disaster.
 
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