MReport March 2018

TheMReport — News and strategies for the evolving mortgage marketplace.

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48 | TH E M R EP O RT SERVICING THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T The Long-Term Impact of Hazard Mitigation As hurricane-hit regions struggle to recover, a report takes a look at hazard-mitigation strategies for the mortgage servicing industry. B enjamin Franklin once said that "an ounce of prevention is worth a pound of cure." As regions such as California, Florida, Texas, and Puerto Rico struggle to recover from damaging natural disasters, the implications of those words for the mortgage, hous - ing, and servicing industries are becoming very clear. Now a new report has thrown a spotlight on just how much that ounce of prevention can be worth in real- world terms. The National Institute of Building Sciences (NIBS) has issued a report entitled "Natural Hazard Mitigation Saves: 2017 Interim Report," following up on a similar report originally published more than a decade ago. With the National Oceanic and Atmospheric Administration (NOAA) having singled out 2017 as the costliest year on record when it came to weather- and climate-related disas - ters, NIBS' report takes a look at various hazard-mitigation strategies that can be implemented to help cushion the impacts of natural disasters. According to the report, federal mitigation funding through grant programs "can save the nation $6 in future disaster costs, for every $1 spent on hazard mitigation." That's quite a return on investment and something worth consider - ing as NOAA reports there were 16 weather- and climate-related U.S. disasters that each exceeded $1 billion in damages in 2017. The total cost of these disasters was $306.2 billion, according to NOAA, which easily surpassed the previ - ous annual record of $214.8 billion set in 2005. The NIBS study drew its con- clusions based on 23 years' worth of federally funded mitigation grants from the Federal Emergency Management Agency (FEMA), U.S. Economic Development Administration (EDA), and U.S. Department of Housing and Urban Development (HUD). It also found that designing buildings to exceed the International Code Council's (ICC) model building codes could save the U.S. $4 for every $1 spent. That level of federal investment and building design upgrades could collectively "prevent 600 deaths, 1 million nonfatal injuries and 4,000 cases of post-traumatic stress disorder (PTSD) in the long term," the report concludes. Moreover, upgrading building standards would generate 87,000 new long-term jobs, according to the NIBS report. The report recommends various different long-term mitigation strat - egies, including demolishing flood- prone buildings, adding hurricane or tornado shelters in affected areas, and replacing roofs and managing surrounding vegetation in order to minimize fire dangers. Delinquency Outlook is a Mixed Bag Florida leads the nation in severely delinquent mortgages, while other states track lowest foreclosure starts since Great Recession. T he state of mortgage delinquencies was a mixture of good and bad news as 2017 wrapped up, according to a new report by Black Knight, Inc., a provider of integrated tech- nology, data, and analytics for lenders and servicers. Black Knight recently released its First Look at December 2017's mortgage performance data, revealing that serious delinquencies increased both month-over-month and year-over-year. According to Black Knight's report, another 60,000 mortgages be- came delinquent by more than 90 days in December 2017, which adds to a total of approximately 143,000 90-day-plus delinquencies that can be attributed to Hurricanes Harvey and Irma. That represents 20 per- cent of the nation's entire stock of severely delinquent mortgage loans. Florida has now overtaken Mississippi as the state with the largest share of severely delinquent (more than 90 days past due) mortgages. Hurricane Irma's after effects could be felt throughout both Florida and Georgia in December, with 102,500 severely delin- quent loans in those states directly attributable to Irma. In Texas, 40,200 severely delinquent loans could be traced back to damages from Hurricane Harvey. After Florida, the five states with the most severely delinquent mortgage loans in December 2017 were Mississippi, Louisiana, Texas, and Alabama. The overall delinquency rate, tracking loans 30 days or more past due, but not yet in foreclosure, increased 3.47 percent in December month-over-month, reaching its highest level since early 2016. However, Black Knight reports that foreclosure starts decreased to 44,500 in December, the lowest number since the Great Recession. The inventory of loans in active foreclosure is also slowly improv - ing, dropping by 152,000 year-over-year, which amounts to a 32 percent decline. The number of properties that are 90 or more days overdue, but not in active foreclosure, came in at 726,000 in December, up by 44,000 year-over-year.

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