– FEMA-designated disaster areas related to Hurricane Harvey are home to 1.18 million mortgaged properties
– Harvey-related disaster areas contain over twice as many mortgaged properties as those connected to Hurricane Katrina in 2005, carrying nearly four times the unpaid principal balance
– Post-Katrina mortgage delinquencies in Louisiana and Mississippi FEMA-designated disaster areas soared 25 percentage points, peaking at over 34%
– A similar impact to Harvey-related disaster areas would equate to 300,000 borrowers missing at least one mortgage payment, and 160,000 becoming 90 or more days past due
The Data & Analytics division of Black Knight Financial Services, Inc. released an updated assessment of the potential mortgage-related impact from Hurricane Harvey. As Black Knight Data & Analytics Executive Vice President Ben Graboske explained, using post-Katrina Louisiana and Mississippi as benchmarks presents the possibility for significant rises in both early and long-term delinquencies. “Although the situation around Hurricane Harvey continues to evolve, millions of American lives have already been impacted by the storm and immense flooding,” said Graboske. “For many, their struggles are just beginning. Using post-Hurricane Katrina as a model, Black Knight has found that as many as 300,000 homeowners with mortgages in FEMA-designated Harvey disaster areas could become past due over the next few months. Post-Katrina, delinquencies spiked in Louisiana and Mississippi disaster areas, jumping 25% to peak at 34% of all mortgaged properties being past due. The serious delinquency rate – tracking mortgages 90 or more days past due, but not yet in foreclosure – rose to more than 16%. New Orleans was hardest hit, with its delinquency jumping by 46 percentage points to nearly 55%, and the serious delinquency rate increasing by 24%
“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. 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. Still, there are 1.18 million mortgaged properties in Harvey-related disaster areas, more than twice as many as were hit by Hurricane Katrina, with nearly four times the unpaid principal balance. This will be a long-term recovery. If the Harvey-related disaster areas follow the same trajectory as those hit by Katrina, within four months we could be looking at as many as 160,000 borrowers falling 90 or more days past due on their mortgages.”
By the Numbers
– Total mortgaged properties in Hurricane Harvey-related FEMA disaster areas: 1,180,000
– Total mortgaged properties in Hurricane Katrina-related FEMA disaster areas: 456,000
– Total unpaid mortgage balances in Hurricane Harvey-related FEMA disaster areas: $179 billion
– Total unpaid mortgage balances in Hurricane Katrina-related FEMA disaster areas: $46 billion
– Post-Katrina delinquency (30+ days) increase in FEMA-designated disaster areas: from 8.7 to 34%
– Post-Katrina serious delinquency (90+ days) increase in FEMA-designated disaster areas: from 2.8 to 16.3%.
– Post-Harvey potential new delinquencies (30+ days): 300,000
– Post-Harvey potential new serious delinquencies (90+ days): 160,000
Equifax: 143M US consumers affected by criminal cybersecurity breach
Credit reporting company Equifax (EFX) announced Thursday a cybersecurity data breach that could have impacted about 143 million US consumers. The company said in a statement the unauthorized entry occurred mid-May through July 2017, as criminals “exploited US website application vulnerability” to access files ranging from social security numbers, birth dates, addresses and driver’s license numbers. Hackers also accessed the credit card numbers of about 209,000 consumers in the US and other documents with personal identifying information for about 182,000 people in the US Equifax said it discovered the breach on July 29, 2017 but did not publically disclose the information until Sept. 7, 2017. “This is clearly a disappointing event for our company, and one that strikes at the heart of who we are and what we do. I apologize to consumers and our business customers for the concern and frustration this causes,” Equifax Chairman and CEO Richard F. Smith said in a statement. “We pride ourselves on being a leader in managing and protecting data, and we are conducting a thorough review of our overall security operations. We also are focused on consumer protection and have developed a comprehensive portfolio of services to support all US consumers, regardless of whether they were impacted by this incident.”
Equifax said it also found that hackers gained unauthorized access to limited personal information for certain residents in the United Kingdom and Canada. The company said its investigation has not found any evidence of illegal activity on its “core consumer or commercial credit reporting databases.” “This is the nuclear explosion of identity theft opportunity. They’ve got names, dates of birth, Social Security numbers, addresses … I don’t think 143 [million] is going to be the number. Like with anything else, it starts at a number and it always seems to grow. So this thing could grow higher than 143 million,” cybersecurity expert Morgan Wright told “Risk & Reward.” As a result, the company has set up a website for consumers Opens a New Window. that will help them identify if their information was affected. It will also send notices directly in the mail to consumers that have had credit card numbers or dispute documents with personal identifying information compromised, according to Equifax. Shares of Equifax tumbled nearly 6% in after-hours trading and have advanced 19% this year.
CoreLogic – Hurricane Harvey: identifying the insurance gap
– CoreLogic estimates that 70% of the flood damage from Hurricane Harvey is uninsured
As hurricane Harvey made landfall north of Corpus Christi last week, this Category 4 hurricane left devastation in its wake. CoreLogic® estimates that the total residential insured and uninsured flood loss for Hurricane Harvey is between $25 Billion and $37 billion. In the days before making landfall, the hurricane rapidly intensified, transforming itself from a small tropical storm of little concern, to now, what we consider to be one of the most devastating hurricanes to hit the United States. Yet, the real characteristic that sets Hurricane Harvey apart from other hurricanes is the unprecedented flooding that resulted, with record setting rainfall reaching upwards of 50 inches in a single location. Subsequently, the enormous geographic breadth of the flood area is beyond comparison to any recent hurricane or flood event in the US CoreLogic analysis estimates that 70% of the flood damage from Hurricane Harvey is uninsured, highlighting an insurance gap that leaves many of those impacted uninsured.
Naturally occurring catastrophic events can be tipping-point events, where a failure in one area can quickly cascade into interconnected failures. We cannot control the timing of low-probability catastrophes (and the rare occurrence of more than one event in a short period, such as Hurricane Irma on the heels of Hurricane Harvey, making landfall in the continental United States) of this severity but can improve our ability to respond, and subsequently rebuild. Having a comprehensive and granular understanding of risk powered by data and analytics is critical to that. We look to do this through improvements gained largely though the maintenance of better insurance exposure data sets, and the introduction and acceptance of catastrophe risk loss models that can simulate the occurrence of large catastrophic events. In 1992 when Hurricane Andrew made landfall, it took months for the government and insurance industry to accurately quantify the losses from this event and this delay increased the losses in both financial and human terms. However, in the wake of Hurricane Katrina, the loss severity was rapidly assessed, quickly putting into motion large scale government and private restoration efforts. In short, as bad as the effects were from Hurricane Katrina, they could have been significantly worse.
The widespread flooding from Hurricane Harvey, caused by storm surge and inland flooding, highlights the challenge of flood risk to properties in the United States. Since we cannot influence the timing and severity of natural catastrophes, we need to focus on resilience – our collective ability to rebuild and restart businesses and lives. Insurance is an important part of our resilience because insurance provides the funds necessary to restore the damage to capital from these events. Hurricane risk modeling became accepted after Hurricane Andrew highlighted weaknesses in our ability to respond to large urban catastrophes, and this adoption has led to faster restoration of lives and livelihoods after hurricanes. Flood risk modeling is a much more complex data and analytic challenge than hurricane risk modeling, but the greater availability of location data sets and grid computing in 2017 have improved our ability to respond to flood disasters. If we characterize the last phase of risk resilience improvement as the era of catastrophe modeling data and analytics, the next era will be known as the era of big data and grid-computing analytics. And one where we began to actively manage flood risk in the United States.
FBI probing if Uber used software to interfere with rivals: WSJ
The Federal Bureau of Investigation is probing to see if Uber Technologies Inc had used software to illegally interfere with its competitors, The Wall Street Journal reported on Friday. The investigation is focusing on an Uber program, internally known as “Hell,” that could track drivers working for rival service Lyft Inc, the WSJ said, citing people familiar with the investigation. Under the program, which was discontinued last year, Uber created fake Lyft customer accounts to seek rides, allowing it to track nearby Lyft drivers and ride prices, the Journal said. This also allowed Uber to obtain data on drivers who worked with both the car-ride providers and could have allowed it to lure drivers to leave Lyft with cash incentives, WSJ added. Uber was not immediately available for comment. The key question for investigators was whether the program comprised of unauthorized access of a computer, the newspaper reported. The investigation is being led by the FBI’s New York office and the Manhattan US attorney’s office, the Journal said. Uber is already grappling with a range of legal troubles and the report of the FBI investigation comes days after the company named Expedia’s Dara Khosrowshahi as its chief executive.
House to consider bill to change TRID rules
The House of Representatives could soon consider a bill that would bring several changes to the Consumer Financial Protection Bureau’s “Know Before You Owe mortgage disclosure rule”, also known as the TILA-RESPA Integrated Disclosure rule or TRID. The new bill is called the “TRID Improvement Act of 2017,” and has yet to be officially introduced into the House, but the bill was discussed on Capitol Hill on Thursday during a meeting of the Financial Institutions and Consumer Credit Subcommittee of the House Financial Services Committee. The bill is sponsored by Rep. French Hill, R-Arkansas. According to the Republican arm of the House Financial Services Committee, the TRID Improvement Act of 2017 would amend the Real Estate Settlement Procedures Act and the Truth in Lending Act to expand the time period granted to a creditor to cure a good-faith violation on a loan estimate or closing disclosure from 60 to 210 days. The bill would also amend RESPA to “allow for the calculation of a simultaneous issue discount when disclosing title insurance premiums.” The bill’s proposed changes come just over a month before the CFPB’s finalized updates to TRID rule officially take effect on Oct. 10, 2017. The Federal Register published the rule last month, marking the 60-day period until the amendments take effect. The bureau released the updates back in July, answering industry calls asked for greater clarity and certainty on the controversial rule.
During the hearing, the Financial Institutions and Consumer Credit Subcommittee also discussed a number of other bills, including the “Community Institution Mortgage Relief Act of 2017.” That bill, which is set to be formally introduced by Rep. Claudia Tenney, R-New York, would amends the Truth in Lending Act to direct the Consumer Financial Protection Bureau to “exempt from certain escrow or impound requirements a loan secured by a first lien on a consumer’s principal dwelling if the loan is held by a creditor with assets of $50 billion or less.” The bill would also require the CFPB to provide certain exemptions to the mortgage loan servicing and escrow account administration requirements of the Real Estate Settlement Procedures Act for servicers of 30,000 or fewer mortgages. “The legislation discussed in the Subcommittee today will better allow financial companies to serve their customers,” Subcommittee Chairman Rep. Blaine Luetkemeyer, R-Missouri. “From banks and credit unions to attorneys, we’ve seen an impeded ability for businesses across the nation to offer financial services and guidance. In order to preserve consumer choice and financial independence, Congress must tackle regulatory reform and simplify rules. The policies outlined in today’s legislation start to break down those barriers.”