360,000 Loans Hit by Katrina
Some 360,000 residential mortgages could be negatively impacted by the rampage caused by Hurricane Katrina in Louisiana, Mississippi and Alabama, according to preliminary estimates made by the Mortgage Bankers Association.
"With the magnitude of the destruction people might lose jobs, jobs that might not come back for a long time," said MBA economist Doug Duncan.
Meanwhile, mortgage insurers, servicers, and investors were responding to the hurricane with a variety of forbearance initiatives.
Mr. Duncan cautioned that MBA's estimate is preliminary and that some neighborhoods affected by the storm might be on higher ground, thus avoiding some of the flooding damage occurring when the levees broke in New Orleans last Tuesday.
"It's a rough estimate (on the number of loans)," he said. "We don't want to overstate it."
Early estimates on residential and commercial property damage range as high as $20 billion. Insurance industry sources said insurance claims could reach $60 billion, according to published reports.
Consumers with mortgages are at risk because their homes have been damaged or destroyed, or they face employment loss due to the storm.
Mortgagors who receive their mortgage statements in the mail do not even know when mail service will resume, said the MBA economist. "There may be no one there to get the mail."
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