It wasn’t the perfect storm, but more like a perfect series of storms: Harvey, Irma, and Maria all hit in swift succession. And while 2017 didn’t set the record for the number of 1,000-year storms (there were six in 2016), it did rack up between $50 and $65 billion worth of damage to residential housing in just the continental U.S., according to CoreLogic.
As a result, mortgage servicers with REO inventory in these impacted areas are still dealing with the aftermath of these storms. They are working with their vendor partners—field service companies, insurers, contractors, and asset managers—to determine what the repairs will cost and what are the new timelines for disposition.
Obviously, no servicer can predict the timing or the path of natural disasters or afford to totally “batten-down” every property so it can withstand wind, storm surge, and flood damage. But there are certain best practices that servicers can put in place with their asset management partners to shorten the recovery period.
- Know before the storm. Understand the areas that have been impacted in the past by natural disasters and your exposure in those areas. If you don’t know your inventory, insurance coverage, and potential exposure before storm season begins, it may be too late.
- Stay up to date on the path of the storm. Many storm models are widely available that predict the path of the storm and they’ve become more accurate as the years have passed. Rely on what’s available, knowing that anything can change.
- Take stock of inventory that lies in the potential path of the specific storm, allowing for course deviations. You should know the worst-case scenario, including those homes that may or may not be impacted. Cover all your bases before the storm hits.
- Communicate with field service partners to prepare as much as possible. Share your list of assets with a trusted field service partner, asking them to add inspections of your assets immediately after the storm.
- Hit the ground as quickly as possible to assess damage. Time is of the essence, and the quicker you understand your total exposure, the better. Offer incentives, if needed, to gather an accurate assessment of your assets.
- Demand comprehensive post-storm follow up. While some storm assessments will wrap up in relatively short order, others will be elongated due to many factors (think Irma, Maria, and Puerto Rico). Be prepared to authorize direct travel and inspections by those not residing in the impacted areas.
As experienced recently, storm damage only puts additional strain on limited local resources after a natural disaster occurs. Without pre-planning for these events to better understand your potential exposure, there are plenty of opportunities to be caught flat-footed and underestimate losses. Partnering with a firm that has experience with all types of weather is the key.