The devastation left behind by Hurricane Harvey could result in 300,000 new mortgage delinquencies, with 160,000 borrowers becoming 90 days or more past due, according to a new forecast from Black Knight Financial Services (BKFS).

This new forecast is based on a comparison to the 2005 damage left by Hurricane Katrina, when mortgage delinquencies in FEMA-designated disaster areas across Louisiana and Mississippi soared by 25 percentage points and peaked at over 34 percent.

The areas impacted by Harvey have twice as many mortgage properties as those impacted by Katrina—Black Knight estimated there are 1.18 million mortgaged properties in Hurricane Harvey-related FEMA disaster areas, with $179 billion in unpaid mortgage balances. However, Black Knight Data & Analytics Executive Vice President Ben Graboske noted the federal government has some buffers in place to block a potential mortgage catastrophe.

“Thankfully, Fannie Mae, Freddie Mac and the Federal Housing Administration have all announced temporary moratoria on evictions and foreclosure sales in Harvey-related disaster areas,” Graboske said. “With these three organizations accounting for nearly 900,000 of mortgaged properties, the moratoria should help temper the negative effects. Forbearance plans will help as well, though interest on the mortgage will continue to accrue under any of these efforts.”Servicing.

What do you see to do?

Corey 

The Outback Real Estate Investment Network

subbed 

I don't know—I tend to think the economic response of Hurricane Harvey will be different than that of Katrina, mainly because Houston's economy is very different than New Orleans' economy. Also, the total percentage of houses that flooded in Houston is much less than New Orleans.

I'm no economist, but I am a Houstonian, and I don't see this turning into a foreclosure crisis.

In my opinion, after Katrina, two big factors led to the quantity of foreclosures, and I believe neither will have nearly the same impact in Houston and surrounding area.

1) A substantial portion of New Orleans' population left and has never returned.  That was a huge impact on the economy (retail, construction, services, etc.)  and led to substantial job loss, likely the number one cause of foreclosure.

2) The tourism and convention business, a huge portion of New Orleans economy, effectively disappeared for a couple of years - again huge job losses.  Houston has that as well, but is a much smaller percentage of our economy.

Unless we lose a substantial portion of our population (which I don't see likely at all), very few jobs will be lost in Houston, thus a very small number of foreclosures. Obviously the wild card is how widespread is the FEMA support going to be for those without flood insurance. Yes, there will be some foreclosures from that side, but I just don't see it being anywhere near that projection.

As stated in another post, the New Orleans economy was not in good shape before Katrina and was in worse shape after. Houston does not have those problems.

I don't buy it. Comparing Houston and NOLA is apples and oranges. Different demos, different economies. And as bad as Harvey was, it was nothing relative to how Katrina impacted NOLA.

The banks are falling all over themselves trying to be the good guys. They're offering forbearance on mortgage, credit card, and other debt payments. Chase is even refunding my monthly service fees. They're also refunding NSF fees and ATM fees.

That should go a long way to give borrowers some breathing space and help them get back on their feet. And I'm sure they'll do the same thing in Florida.

No way is what happened to Houston the same as what happened in Katrina.  Katrina caused massive infrastructure damage that prevented people returning to there homes for months (not days or weeks, but months).  I live in NOLA and wanted to get back to my house.  I did not have power on my street until April 2006, a full 7 months after the storm.  And this was typical of the area.  While I was determined to return, most did not have the ability or desire to wait.  

Another thing to consider is that NOLA had quite a few areas that were filled with low value housing.  Given the crazy costs of rebuilding after Katrina, lots of areas could not support the costs of rebuilding (i.e. if it cost $75/ft2 to rebuild, but pre-storm values were less than on a $/ft2 basis), alot of people did not want to be upside down in there house.

During Katrina, most banks gave borrows affected relief on paying their bills,  Most of mine gave me at least 6 months of no payments.