(Reuters) - U.S. mortgage agencies face possible losses on some of the 400,000 mortgages they guarantee on homes ravaged by Hurricane Harvey, but they will not know the extent of the damage until the wind and rain stop in Texas and Louisiana.
Some of the structures may not have flood insurance, which may result in homeowners abandoning the buildings because they will not have the money to rebuild. Even with insurance, some homeowners may suffer job losses or health problems and fall behind on their mortgage payments.
More than 200,000 homes with mortgages guaranteed by Fannie Mae and Freddie Mac are in areas hit by Hurricane Harvey, the most powerful storm in Texas in more than 50 years, the mortgage agencies said on Monday.
About another 200,000 homes with loans insured by the Federal Housing Administration are in the affected counties, the Department of Housing and Urban Development said.
These figures were preliminary as more homes will likely be impacted this week as Harvey is forecast to bring more flooding to these areas. Inspectors have not been able to assess the homes.
“As FEMA begins to assess the damage and respond to the immediate needs of residents, HUD will be there to offer assistance and support the longer-term housing recovery efforts,” HUD Secretary Ben Carson said in a statement.
Those homeowners without flood insurance may need the most help.
In Houston, U.S. fourth most populous city, 52 percent of properties are considered moderate-to-high risk for flooding, and located outside special flood hazard areas that require them to carry flood insurance, property data firm Corelogic said.
Because flood insurance is expensive, some home and businesses not in those special zones might not buy the insurance.
Smaller Texas cities in Harvey’s path such Bay City and Beaumont also have more than half their moderate-to-high risk properties outside designated zones to carry flood insurance, according to Corelogic.
Fannie Mae said it guarantees loans on some 36,000 homes in Harvey’s initial impact area with about $5.1 billion in unpaid principal balance.
Freddie Mac said it has so far counted about 167,000 homes whose mortgages it secured in the 18 counties affected by Harvey.
Under Fannie Mae’s disaster relief guidelines, a mortgage servicer may suspend or reduce a homeowner’s mortgage payments for up to 90 days if it believes a natural disaster has adversely affected the value and habitability of the property.
The same criteria can apply if a natural disaster has temporarily had an impact on the homeowner’s ability to make mortgage payments.
Freddie Mac said it would provide mortgage relief to borrowers whose homes have not been impacted but whose places of employment have been impacted by the storm.
In addition to disaster aid, HUD said it will grant immediate foreclosure relief on FHA-backed homes for 90 days and it will make mortgage insurance available to homeowners who have lost their homes.
"Please note that, until the storm and flooding are over, we will not be able to fully assess the impact and determine which properties have actually sustained damage," Freddie Mac spokeswoman Lisa Tibbitts said in a statement.