How does an impending hurricane affect real estate and lending? While we are all waiting out the effects of Hurricane Lane, let’s highlight some of the issues that arise.
Let’s first start with the news a hurricane is on track to our islands. Except for those already in the midst of a transaction, most people put the thought of buying a home or refinancing on hold once the details of the storm were all over the news. After all, who would go into contract to buy a home when there is a possibility that home may be damaged by the upcoming storm? Talk to any person in real estate or mortgages, and this week’s new business opportunities were over long before Lane was anywhere close to the islands. To be fair, the same is true of other aspects of our economy. No one was out shopping for a new car or buying furniture either.
For those already in contract to buy a home or in the middle of a mortgage transaction, the advance of Lane on Hawaii created many problems.
A moratorium on the issuance of new insurance policies went into effect on Tuesday. In some cases, transactions are delayed because having the insurance in place is required before Final Loan Approval, and the loan moving to closing.
We cancelled appraisal inspections for the remainder of the week because even if the home were not damaged by the storm, if the Governor issues a disaster declaration, the property would need to be re-inspected. That additional inspection will cost our clients more money. It’s better to just wait.
The signing of final loan documents in some cases were postponed due to offices be closed. Loans to be funded by the lenders were possibly delayed for the same reason.
Even if nothing comes from Hurricane Lane, expect delays in transactions moving forward. The mortgage industry rarely has excess capacity to take on more work. Processors, underwriters, and closing agents can handle only so many files per day. Now, with most offices closed for 2-3 days, there will be a delay for all that missed work time to be caught back up.
Let’s hope that Lane is the non-event it is showing itself to be so far. I lived through both Hurricane Iwa and Iniki. We would not want any of that for Oahu, nor Kauai again.