So what will all the broken pipes do to lending in Texas

11 Replies

So I hear everyone talking about the coming fire sale in real estate from non payment of rents, but with this new winter disaster that has taken Texas literally by storm, does anyone see major changes in lenders underwriting?  WIll this trigger massive selloff in Texas?

I am sure that we are just seeing the beginning of the thaw which will bring 100's of broken pipe claims.  This is really unfortunate.  We have seen Covid underwriting guidelines change lending this last year is this winter storm the next thing to add to the lending underwriters nightmare?

I am hearing from my mortgage friends that guidelines are being changed on underwriting by the hour as this disaster unfolds.  Does anyone have experience with how natural disasters have shaped lending policies?

I am trying to think..  when the big one hit the SF bay area in 89 along with the war.. real estate tanked in SF.. but not sure it was because of lending.  More from buyers just deciding not to buy.  And panic selling..

there were deals though there was a  lot of damage to un reinforced brick buildings in Oakland.

WE just had a big ice storm in Portland last week.. and its mostly insurance claims.. my basement flooded because sump pump failed so I am covered. 

And the Hurricanes did not seem to affect Texas to much it became opps for buyers though for those with no insurance.

I dont see this changing underwriting.. its not like its an annual event.

I just happened to be in Jackson MS when the last deep freeze happening in Jan of 09 and it was a major mess there with city mains bursting everywhere and the city literally out of water..  life will go on.  lending will go on I suspect

Hi @Shannon Robnett !

Lenders handle natural disasters in a really orderly way:

If the appraisal is not yet completed, we just let the appraiser do their thing. If there are issues, they will comment on the condition of the home. 

If no appraisal was required or the appraisal is already completed we order what we call a DAIR... a disaster area inspection report. I googled up random example here

If the property has been damaged in a way that impacts the value, marketability, safety or habitability of the home, we can't the loan until the damage has been repaired. Really the only exception for financing a house that has sustained damage would be a renovation loan.

I'm in Oregon so I ordered many dozens of DAIRS on homes in counties impacted by our forest fires this summer and fall. And I'll be ordering one this week for a client's purchase in Texas slated to close next week. 

Julee

@Shannon Robnett

So exactly "I am hearing from my mortgage friends that guidelines are being changed on underwriting by the hour as this disaster unfolds" how are the guidelines being changed?  Reality is they are not.  This is a blip and things will be back to normal in a matter of days.  Most landlords are covered by insurance.  Hell I received an offer today on a property.  Out of close to 40 flips and rentals I have had one minor issue.  Just because the media is in a slow news period and needs something does not mean there is devastation everywhere

Originally posted by @Julee Felsman :

Hi @Shannon Robnett !

Lenders handle natural disasters in a really orderly way:

If the appraisal is not yet completed, we just let the appraiser do their thing. If there are issues, they will comment on the condition of the home. 

If no appraisal was required or the appraisal is already completed we order what we call a DAIR... a disaster area inspection report. I googled up random example here

If the property has been damaged in a way that impacts the value, marketability, safety or habitability of the home, we can't the loan until the damage has been repaired. Really the only exception for financing a house that has sustained damage would be a renovation loan.

I'm in Oregon so I ordered many dozens of DAIRS on homes in counties impacted by our forest fires this summer and fall. And I'll be ordering one this week for a client's purchase in Texas slated to close next week. 

Julee

wow thats a lot of state licenses  do you do CE in every one of them ?

 

Texas's insurers will have a lot of expenses in claims. Later, rates may go up and that would cause values to dip. Probably not a huge raise, however. If you are a mold inspector or mitigator, you are rubbing your hands though.

Originally posted by @Julee Felsman :

@Jay Hinrichs @Shannon Robnett  

I need to update my signature with a few more licenses... I'm licensed everywhere but NY (license submission is pending in NY... they're been slow). 

CE is a slog... but a girl's gotta have a hobby (mine is collecting state licenses... and rentals). :)

I see on the NMLS system you are indeed authorized to do business in all those states  there was a small test you could take back about 10 years ago that allowed you once you had a Oregon license to be basically grandfathered into most other state I think they called it the UTS test I took that and passed it in about 10 minutes the girl thought i gave up LOL.. took me longer to figure out how to use the darn thing than to actually answer the questions..  But I know in oregon its every year 30 hours.. so just curious if every state is like that  ?  I am active/inactive and but just keep my CE in Oregon so I dont have to take the test again.. .. anyway  pretty amazing reading all those state on your jacked in the NMLS registry.. 

 

@Jay Hinrichs  

The UST was pretty simple to pass, although by the time I got around to taking it (a few years ago, when I wanted to start adding licenses to my long-time OR/WA), I had to redo the initial 20 hours.

A few states require the 20 hours within X years of requesting a license from them (3 is common).The hardest state is Utah. Because I'm the branch manager, I had to take a 40 hour PE before I could apply for my license AND take a proctored test on just Utah law. Got that one knocked out this winter.

Now I'm just waiting for NY to get around to processing an application I submitted 4 or 5 months ago and I'll have collected the whole set. I actually have an sticker map of the US at my office (you know the kind you see on RVs?). Just itching to put that NY sticker on there. :)

My annual CE for all states is about 29 hours for all the stages plus 8 hours for Federal. So it's a commitment. But I do keep up on all the regulations that way, so not a bad task to have to tackle.