The aftermath of hurricanes Irma and Harvey

"I Don't Have Anything To Start Over" - Harvey Victims Pray For Relief As 1000s Remain Stuck In Shelters

Zero Hedge,

18 September, 2017

It’s been nearly a month since Hurricane Harvey, a storm that some expect to rank among the costliest natural disasters in US history, and still tens of thousands of Texans remain marooned in temporary housing, unable to return to their flood-damaged homes, while thousands more are struggling to secure hotel rooms and other types of temporary housing, according to the Wall Street Journal.

The scramble for housing has caused occupancy rates at hotels in the Houston area to surge as disaster recovery officials scramble to arrange short-term and permanent housing for those left homeless by the storm. The task of securing shelter for the displaced could take months.

“Lillian Godfrey has been sleeping on an air mattress on the floor of her friend’s shuttered night club, alongside her daughter and two pool tables, ever since floodwaters swept into her home here last month.

 Ms. Godfrey, 74 years old, has a federal voucher for a hotel, but hasn’t had any luck finding a room nearby. Her daughter’s cars were lost in the flooding.

 “’It’s heartbreaking,’ she said. “The Lord closes some doors and opens others. He’s going to pull me through this sooner or later.’”

 

As recently as Saturday night, 4,700 people remained in Red Cross shelters across Texas on Saturday night, according to the relief group. Initially as many as 450,000 Texans were displaced by the storm, while as many as 30,000 sought temporary relief in one of the state’s shelters.

Some of the displaced, uneasy with the prospect of living elsewhere, have remained in their water-damaged homes. Others were staying with friends, family or even strangers.

For the first full week of September, hotel occupancy in Houston grew to 80.5%, nearly double the occupancy rate from the same period a year earlier, according to STR Inc., a data company that tracks the hotel industry.

It is still unclear how many people in Texas will lose their homes because of the storm or how many eventually will be able to move back. But some estimates expect the total damages to property and the US economy in terms of lost productivity could tally as high as $190 billion.

“While the final scope and scale of the housing challenge is still being realized, it is already apparent that this will be one of the largest, most complex efforts ever undertaken,” said Michael Byrne, who is heading up relief efforts in Texas for the Federal Emergency Management Agency.

 According to data collected by WSJ from the state, city and county level, some estimated 50,712 homes suffered major damage in the storm. Meanwhile, 14,952 were destroyed and 76,364 experienced minor damage.

 Local officials say 130,000 single-family homes in Harris County, which includes Houston, were estimated to have been affected by the rampant flooding. Between 2,000 and 3,000 large apartment buildings likely sustained damage, and up to 5,000 smaller apartment buildings may have been damaged as well.

 “In terms of the sheer destruction due to the flooding, this is unprecedented in modern times for Houston,” said Tom McCasland, Houston’s director of housing and community development."

In some towns, the flooding remains so dire that even locations that were initially planned to be shelters flooded, forcing officials to convert public buildings like schools into back up shelters.  

“In Port Arthur, a coastal city of about 55,000, Mayor Derrick Freeman called the housing situation “dire” in the wake of heavy flooding damage.

 This past week, one shelter at a middle school was full after the city’s main shelter had flooded weeks earlier, and some 250 people had been evicted from their homes by landlords because of flood damage, according to Mr. Freeman.

 Another several hundred were being housed at shelters around the state, and between 4,000 and 5,000 people were still living in flood-damaged homes, Mr. Freeman said.”

In Port Arthur, city officials had hoped to temporarily house some of the displaced on two barges that a private company was going to transport from nearby Louisiana. However, by Friday, plans had shifted, and large air-conditioned tents were brought in by FEMA and the state to house the evacuees who had been sheltering at the school.

Meanwhile, many victims who were given hotel vouchers by FEMA are finding it difficult to secure rooms thanks to sky high occupancy rates.

“Debby Valsin, a 54-year-old retiree, had been living at the middle school shelter in Port Arthur with her nine-year-old grandson. She said her landlord terminated her lease after the floods because her apartment was uninhabitable, giving her five days to haul out her belongings.

 Ms. Valsin qualifies for a FEMA hotel voucher but said all the nearby hotels she called are full. For now, with the start of school Monday, Ms. Valsin expected to be moved from the shelter into the tents.

 ‘Your life is upside down,’ she said. ‘I don’t have anything to start over.’”

However, while the situation remains incredibly dire for people on the ground, there may at least be a silver lining in the unprecedented damage brought by the storm – for auto manufacturers, that is.
As we reported last month, while terrible news to car dealers - many of whom face bankruptcy if their insurance policies don't cover all the damages – the storm may be just what the struggling U.S. OEM and supplier industry ordered, according to a RBC.

That is, if locals have any resources left over to purchase new vehicles after their finished covering any out-of-pocket costs, which, despite President Donald Trump signing an aid package worth $15 billion.

$700 Billion Unpaid Mortgage Balances In Hurricane Harvey And Irma Disaster Areas

Zero Hedge,

18 September, 2017

Even 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.

Quantifying the damage, Black Knight calculates that Irma-related disaster areas contain nearly three times as many mortgaged properties as those connected to Hurricane Harvey, and nearly seven times as many as those connected to Hurricane Katrina in 2005. In dollar terms, this means that there is some $517 billion in unpaid principal balances in Irma-related disaster areas, nearly three times the amount as in those related to Harvey and more than 11 times of those connected to Katrina.

“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 way.

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.

To be sure, there are mitigating circumstances: Florida borrowers likely have more insurance and less exposure to loss, but for those homes with the most damage, homeowners will be making the same calculation as those that suffered devastating flooding after Harvey. Another issue in Florida according to Olick is that even a decade later, the housing market is still recovering from the foreclosure crisis.Five percent of Florida borrowers still owe more on their mortgages than their homes are worth, and an additional 5 percent have very little equity in their homes. Home prices in Fort Myers, which saw considerable flooding from Irma, are still 29 percent below what they were during the housing boom.

Still, in order to avoid a surge in foreclosures, lenders are more likely to offer borrowers, even seriously delinquent borrowers, options to catch up, although the biggest risk to lenders will be in Houston, where some homeowners may see no good reason to stay.

There was some silver lining: “As Irma forged its path of destruction through the Caribbean, one relatively positive development was that Puerto Rico escaped the direct hit many had predicted. From a mortgage performance perspective, this was particularly good news, as delinquencies there were already quite high leading up to the storm. At more than 10 percent, Puerto Rico’s delinquency rate is nearly three times that of the U.S. average, as is its 5.8 percent serious delinquency rate. In contrast, the disaster areas declared in Florida have starting delinquency rates below the national average, providing more than a glimmer of optimism as we move forward.”

Unfortunately, Hurricane Maria, now a Category 3, is expected to hit Puerto Rico some time on Wednesday, adding to the damage already suffered from Irma, and potentially sending the already bankrupt territory reeling even deeper into the financial hole.