When Hurricane Maria hit Puerto Rico, leaving devastation in its wake, the island’s housing market was already in the depths of a foreclosure implosion. Now the situation is about to get worse, according to an article in the New York Times.
The report, which was published on Monday, said that about one-third of the Puerto Rico’s 425,000 homeowners were behind on their mortgage payments to banks and Wall Street firms that previously bought up distressed mortgages.
Tens of thousands have not made payments for months, and about 90,000 borrowers became delinquent as a consequence of Hurricane Maria, the Times report said, quoting Black Knight Inc., a data firm formerly known as Black Knight Financial Services.
According to the report, Puerto Rico’s 35 percent foreclosure and delinquency rate is more than double the 14.4 percent national rate during the depths of the housing crisis in the U.S. After the hurricane in September, residents won a reprieve when the federal government imposed a temporary moratorium on foreclosures, which stops banks and investors that bought mortgages at cut-rate prices from evicting delinquent borrowers or starting new foreclosures.
Many lenders also have agreed to waive missed payments during this moratorium, which is scheduled to expire in early 2018. Lawyers and housing counselors expect a surge in foreclosures once this moratorium expires, the Times report said.
In the past several years, a slew of bargain-hunting banks, hedge funds, and other financial institutions scooped up distressed residential mortgages and foreclosed homes in Puerto Rico. The list includes big investment banks like Credit Suisse and Goldman Sachs, as well as smaller boutiques.
With around 44 percent of the population already impoverished, Puerto Rico’s housing meltdown could rival the foreclosure epidemic in Detroit where abandoned homes became almost as plentiful as occupied ones, the Times report said.
Home prices over the past decade have fallen by 25 percent, and lenders have foreclosed or filed to foreclose on 60,000 home loans, according to the Puerto Rico state court system. Last year, there were 7,682 court-ordered foreclosures—a roughly 33 percent increase from 2007. Some 13,000 foreclosure cases are pending, the report said, citing an estimate by Black Knight.