Hurricane Sandy ripped through New Jersey months ago, but the damage done is still being discovered. Recent reports have indicated that mortgage delinquencies have risen in areas hit by the hurricane. The financial losses suffered by many in our state may lead to a surge in bankruptcy filings if homeowners are unable to recover from Hurricane Sandy’s aftermath.
Shortly after the hurricane, Freddie Mac and Fannie Mae agreed to halt evictions and foreclosures for approximately 90 days. In addition, companies that service Freddie Mac and Fannie Mae loans have been authorized to provide forbearance plans that may last up to 12 months. Even with these concessions, the rate of delinquent mortgages has risen to approximately 15.2 percent in New Jersey since Hurricane Sandy.
Some of the homeowners that are delinquent on their mortgage payments have found themselves with houses that are no longer habitable. For other homeowners the problem stems from the fact that they lost their job due to the hurricane. No matter what the reason for the delinquency, the New Jersey housing market has suffered in the aftermath of the hurricane.
Of course, there were many homeowners that were struggling to keep their homes prior to the hurricane, and victims of Hurricane Sandy have now been added to those numbers. Many people have been unable to not only make their payments, but are also facing foreclosure. Filing for bankruptcy protection may help struggling homeowners find the breathing room they need in order to attend to their financial life unhindered by the threat of foreclosure. For many homeowners, this could give them the time to decide whether to make another attempt to save their home or walk away. Either way, bankruptcy could give homeowners a fresh start in their financial lives.
Source: Bloomberg, “Mortgage Delinquencies Jump in Areas Hit Hard by Sandy,” Prashant Gopal, Jan. 14, 2013