Before a mortgage can close, the home needs to be inspected and in the week after Hurricane Sandy, orders for inspection reports are surging–big time.
According to a report from industry vendor a la mode inc., disaster inspection reports spiked to more than 200-times “normal.” In response to the storm, the company said its Mercury Network affiliate will waive “all fees related to gathering disaster reports in the affected areas.”
The announcement was made in a press statement Monday. At deadline the vendor could not for reached for additional comment, but according to interviews conducted with lenders, brokers and trade group officials, inspection and appraisal delays caused by Hurricane Sandy have scuttled thousands of mortgage closings in the mid-Atlantic and Northeast. New York and New Jersey, in particular, have been hard hit.
Some of these deals may never close–if the home has been destroyed.
Meanwhile, new estimates on property damage range from $20 billion to $50 billion, according to reports from JPMorgan Chase and other firms. “Sources within the insurance industry, as well as JPMorgan’s insurance industry analyst, have ballparked the physical damage in a $10 billion to $20 billion range,” according to a report from JPM.
A report from Moody’s notes that the widespread destruction caused by Hurricane Sandy “should not have a materially negative effect” on private-label residential mortgage backed securities. “We expect home insurance, flood insurance and federal aid to cover most of the losses from the destruction of properties by the hurricane. Therefore, a significant increase in losses on underlying mortgage pools is unlikely.”
