Black Knight: Harvey, Irma Truly Tale of Two Storms
Black Knight, Jacksonville, Fla., said the twin impacts of Hurricanes Harvey and Irma have had significantly different impacts on Texas and Florida, respectively.
The company’s monthly Mortgage Monitor report noted most borrowers affected by Harvey have “significant equity” in their homes, while more than 350,000 borrowers in the Irma disaster area have negative or limited equity.
Specifically, the report said average combined loan-to-value ratio for homeowners with mortgages in Harvey-related disaster areas is 53 percent, holding an average of approximately $131,000 in equity per borrower. Fewer than 0.5 percent of Harvey-impacted borrowers were in negative equity positions prior to the storm and fewer than four percent have less than 10 percent equity.
By contrast, the report said 5.3 percent of borrowers in Irma-impacted counties still owe more than their home is worth, with another 5.6 percent of borrowers having less than 10 percent equity.
Nationally, Black Knight said just 2.8 percent of homeowners with mortgages (1.4 million borrowers) remain in a negative equity position.
In its preliminary “First Look” report in September, Black Knight reported a 16 percent spike in mortgage delinquencies in Harvey-related disaster areas. But Black Knight Data & Analytics Executive Vice President Ben Graboske noted despite the extent of the damage in Texas, Harvey-impacted borrowers have a greater equity stake, which may bode well for long-term recovery.
“Before Hurricane Harvey made landfall, the average combined loan-to-value ratio for homeowners with mortgages in what became FEMA-designated disaster areas was 53 percent,” Graboske said. “Right on par with the national average, that’s the lowest we’ve seen since prior to 2004. This equates to approximately $131,000 in equity per borrower. That works out to a lot of skin in the game, and will likely serve as strong motivation for borrowers not to walk away from a storm-damaged home.”
In addition, Graboske said 75 percent of mortgages in the Harvey footprint are held in Fannie Mae, Freddie Mac or Ginnie Mae securities. “Therefore, the bulk of borrowers affected by the storm will be able to find assistance under the various foreclosure moratoriums and forbearance programs that have been instituted,” he said. “While we have already seen an early spike in delinquencies in Hurricane Harvey-impacted disaster areas, with many more likely to follow in September’s data, the combination of available assistance and healthy equity stakes on the part of borrowers are both very positive signs for the long term.”
Irma, Graboske said, impacted a much larger portion of the state–the 48 FEMA-declared Hurricane Irma disaster areas include more 90 percent of the state’s mortgaged properties.
“To put this in perspective, that means that by balance, over 5 percent of all mortgages in the U.S. are included in Hurricane Irma’s disaster areas,” Graboske said. “Unlike Houston, though, where all-time-high home prices have contributed to a significant reduction in negative equity, home prices in Florida remain 17 percent below their 2006 peak.”
Black Knight said on average, borrowers in Irma-related disaster areas have a CLTV of 57 percent, higher than the national average. Of the 3.2 million borrowers impacted by Irma, an estimated 170,000 were still in negative equity positions before the storm, with another 180,000 having less than 10 percent equity in their homes.
“Due to lackluster home price recovery since the housing crisis, the negative equity rate in Irma’s disaster area is nearly twice the national average,” Graboske said.
Black Knight said between the hurricanes, 4.4 million borrowers representing $705 billion in unpaid principal balance were affected. By volume, the GSEs and Ginnie Mae have the most exposure (3.2 million loans, $466 billion in UPB), but in terms of share of total portfolio exposed, private-label securities are most impacted. Nearly one out of every 10 loans remaining in a PLS was impacted by one or the other of the storms. All in, as many as one in four PLS loans in Hurricane Irma’s path had limited equity available, prior to any potential home price impact due to storm damage.
Other report data:
–Total U.S. loan delinquency rate: 3.93%
–Month-over-month change in delinquency rate: 0.72%
–Total U.S. foreclosure pre-sale inventory rate: 0.76%
–Month-over-month change in foreclosure pre-sale inventory rate: -3.27%
–States with highest percentage of non-current loans: Mississippi, Louisiana, Alabama, West Virginia and Maine
–States with lowest percentage of non-current loans: Montana, Oregon, Minnesota, North Dakota and Colorado.
–States with highest percentage of seriously delinquent loans: Mississippi, Louisiana, Alabama, Arkansas and Tennessee.
