Hurricane Michael is putting mortgage transactions with a combined value of over $400 million in jeopardy, according to ClosingCorp estimates.
While servicers and homeowners linked to disaster-affected properties explore relief options, often overlooked are transactions set to close that are also at risk.
More than 1,600 “in-flight” mortgage applications in progress are in jeopardy as a result of Hurricane Michael. These loans, with closing dates between now and the end of the year, are being originated by more than 100 lenders for properties in 13 Florida counties.
Though some homes may seem to be at low or moderate risk for damage, storm surge can spread to adjacent areas and wreak havoc. Oftentimes, new appraisals will be required before mortgages can be approved and sales be completed. Damage can cause substantial delays and deals to come undone.
Companies like ClosingCorp are notifying lender clients of pending transactions within at-risk counties. Applications in the following Florida counties are in jeopardy: Bay, Calhoun, Escambia, Franklin, Gulf, Jefferson, Leon, Liberty, Okaloosa, Santa Rosa, Taylor, Wakulla and Walton.
Affected homeowners and servicers linked to properties with mortgages already in place can exhaust a number of relief options.
Homeowners can halt payments for up to 12 months without incurring late fees or being reported to the credit bureaus, according to Fannie Mae guidelines for single-family mortgages. Servicers can also suspend or reduce mortgage payments for up to 90 days without having to contact the homeowner. Servicers must also suspend foreclosure and legal proceedings on affected properties.