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Hurricanes

Hurricane Katrina Devastates Mortgage Industry in the Gulf Coast Region

Strategic Insights

— 1 min read

As Hurricane Katrina ravaged the Gulf Coast, a devastating impact was felt in the mortgage industry, with nearly 2,000 licensed loan officers displaced in Louisiana and significant damage to homes and businesses in Mississippi, Alabama, and other affected areas. Despite the dire circumstances, market participants report increased demand for loans, and industry leaders are working together to provide relief and support to those affected.

Key Takeaways:

  • The Louisiana Mortgage Lenders Association estimates that almost 2,000 licensed loan officers have been displaced in the state.
  • Mortgage brokers and lenders in Louisiana are struggling to get offices up and running, but many homes and businesses are in uninhabitable conditions, making it difficult to finance new loans.
  • The National Association of Mortgage Brokers has established a Hurricane Relief Fund, which has raised nearly $400,000 to support displaced members.
  • Industry leaders, including the Louisiana Mortgage Lenders Association, the National Association of Mortgage Brokers, and the Alabama Mortgage Brokers Association, are working together to provide relief and support to those affected.
  • Some mortgage servicers in the affected areas will be given a grace period of up to three-to-five months in certain cases.
  • The long-term impact on the mortgage industry is unknown, but some industry leaders are predicting that it may take 18 months or 2 years for business to return to normal.

Statistics:

  • 80% of New Orleans is reported to have been underwater after Hurricane Katrina.
  • Winds from the hurricane topped out at 145 miles per hour.
  • Hundreds and thousands of customers were left without power in impacted areas.
  • The Federal Emergency Management Agency (FEMA) has cautioned displaced residents not to re-enter damaged areas due to blocked and washed out roads, downed power lines, and unsafe road crossing due to flooding.
  • Nearly $400,000 has been raised by the National Association of Mortgage Brokers' Hurricane Relief Fund.
  • 900 licensed loan originators are located in Mississippi, with about 356 originators located along the coastline.
  • 211 of these originators are directly along the coastline, which has been severely damaged.

Sources:

  • Broker article (no date provided)
  • RBS Greenwich Capital Markets analysis (no date provided)
  • Louisiana Mortgage Lenders Association (no date provided)
  • National Association of Mortgage Brokers (no date provided)
  • Mortgage Servicing News (09 October 2005)
  • SourceMedia (09 October 2005)

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