As of Monday morning, Hurricane Matthew was still raging up the East Coast. More than a million homes lost power in Florida as a result of the storm, while several other states experienced massive flooding that resulted in damage to hundreds of homes.
How does the industry respond when a natural disaster causes so much residential property damage?
For starters, there are some preventative steps to be taken.
“Clients can assess not just delinquent portfolios but their currently performing portfolios so they can assess how many properties are in harm's way,” Safeguard Properties Chief Operating Officer Mike Greenbaum said. “The reason why that's important is there are some things you can actually do to prevent damage. Some of our clients will actually have us go out and do some hurricane boarding, which means putting plywood or Secureview clearboarding up, to protect the asset. That's actually on the front end, so you can minimize the damage that's going to happen to the extent that you can.”
But after the storm has come and gone, there are four steps to take, Greenbaum said.
“Define what areas were affected, overlay how many assets are in the affected area, get an inspector out to the property so you know what was damaged versus what wasn't damaged, and then work with your clients to have them actually get pre-approvals so that we can start taking steps to fixing the property when we physically visit,” he said. “We'll take our active inventory and go back to our individual clients, and then say, ‘Client ABC, it looks like you had 1,042 total assets that were in the affected area. Would you like us to place an inspection order so we can visit the properties and give you a detailed report on whether the asset was damaged?’ Many clients say, ‘Yes, absolutely, get out there and let me know what happened.’ Some clients will actually give us delegated authority allowing us to take curative action.”
Steve McCaffrey, President and CEO of MetroCorp Claims, said,” One of the factors that people will be looking at is whether they have power back in their home and whether their house sustained any substantial damage to where it's even livable. Fortunately so far for this storm, there has been a lot of physical damage, but structurally most of the properties are still intact and they have sustained physical damage but not to the point where the properties are uninhabitable, provided that they have electricity and normal utilities. People want to get back in their homes as soon as possible for a number of reasons. Number one, if they're not in their properties, they could be vandalized or burglarized. And then they'll start the process of assessing the damages and determining if they need emergency services.”
It is possible that many of the homes that are damaged could be in default, and many of them could be unoccupied. When that happens, servicers have to assume that they are damaged, McCaffrey said, and they will want to employ inspection teams with property preservation companies to assess the damage.
“At that point, they'll evaluate it for filing of a hazard claim. They'll do any kind of immediate remediation to preserve the property and protect it, identify the level of damage through pictures and notes, and turn that back over to the servicer,” McCaffrey said. “A hazard claim company like ours would get involved to evaluate the level of damage, and a claim would be filed with the hazard claim company to process the claim and get those damages paid for under the insurance policy.”