http://www.zerohedge.com/news/2017-09-1 ... ster-areasEven as the damage from Hurricanes Harvey and Irma is still being tallied, a preliminary assessment released last week by Black Knight Financial Services estimated that as many as 300,000 borrowers in the vicinity of Houston could become delinquent on their loans and 160,000 could become seriously delinquent, or more than 90 days past due.
That number is roughly four times the original prediction because new disaster zones were designated and more homes flooded when officials released water from reservoirs to protect dams, according to CNBC's Diana Olick. In total, the number of mortgaged properties in Texas disaster zones is 1.18 million, with Black Knight adding that Houston disaster zones contain twice as many mortgaged properties than Katrina zones, with four times the unpaid principal balance.
Putting the Harvey damange in context, after Hurricane Katrina mortgage delinquencies in Louisiana and Mississippi disaster areas spiked by 25%. The same could happen in Houston, as borrowers without flood insurance weigh their options and decide to walk away from the property. While they will get some federal relief, if rebuilding would cost more than the principal in their homes, they could decide to walk away according to Olick.
What about Irma?
According to a preliminary analysis by Black Knight released today, Florida FEMA-designated disaster areas related to Hurricane Irma include a whopping 3.1 million mortgaged properties. As Black Knight's EVP Ben Graboske explained, both the number of mortgages and the unpaid principal balances of those mortgages in FEMA-designated Irma disaster areas are significantly larger than in the areas impacted recently by Hurricane Harvey.
“While the total extent of the damage from Hurricane Irma is still being determined, it is clear that the size and scope of the disaster is immense,” said Graboske.
“Indeed, in terms of the number of mortgaged properties and their associated unpaid principal balances, Irma significantly outpaces even the number of borrowers impacted by Hurricane Harvey. With FEMA expanding the number of Irma-related designated disaster areas late Wednesday, Sept. 13, to a total of 37 Florida counties, more than 90 percent of all mortgaged properties in the state now fall into such areas. More than 3.1 million properties are now included in FEMA-designated Irma disaster areas, representing approximately $517 billion in unpaid principal balances. In comparison, Harvey-related disaster areas held 1.18 million properties – more than twice as many as with Hurricane Katrina in 2005 – with a combined unpaid principal balance of $179 billion. Irma-related disaster areas now contain nearly seven times as many mortgaged properties as those connected to Katrina, with more than 11 times the principal balances.
Combining the preliminary estimates for both Harvey and Irma suggests that over 3.3 million total mortgaged properties are located in Irma and Harvey-related FEMA Disaster zones, while the dollar amount of total unpaid mortgage balances in these two zones is massive: between Irma's $517 billion and Harvey's $179 billion, the total potential damage could impact as much as a $696 billion in notional mortgage values, which banks could be on the hook for if current occupiers decide to simply walk away.
Based on back of the envelope analyses by Black Knight, an extrapolation of the Katrina damage would suggest that Florida could suffer as much as 750,000 mortgage delinquencies as a result of Hurricane Irma.
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