While many lenders on the East Coast as well as nationwide have felt the far reaching effects of Hurricane Sandy, the Mortgage Bankers Association (MBA) has provided a figure for how substantially mortgage originations may stand to suffer.
As lenders vie to close the backlog of loans suspended in the wake of of the storm, application volumes have fallen 5% nationally according to data collected by the MBA, and as much as 50% or more in some heavily impacted areas.
“Last week’s storm had a significant impact on application volumes on the East Coast,” said Mike Fratantoni, MBA’s vice president of research and economics. “Applications fell more than 60% compared to the prior week in New Jersey, almost 50% in New York and nearly 40% in Connecticut,” he said.
The decline spans refinances and purchases, according to MBA’s weekly mortgage applications survey published Wednesday.
Sandy, which wreaked havoc in states from North Carolina to New Hampshire forced many potential borrowers from their homes, and led to lenders across the U.S. to suspend a number of loans in process at the time of the storm’s arrival to comply with federal and state insurance requirements.
Since many borrowers’ homes are now in need of reappraising in response to the damage caused by Sandy, lenders are standing by until all disasters have been declared by the Federal Emergency Management Agency (FEMA).
The process, which lenders expect to be a lengthy one involving contacting each borrower one-by-one to schedule re-inspections, will only then lead to completed loans once appraisers had visited homes and assessed the damage–if any–to the properties.
The process served as a substantial setback for East Coast lenders, who have speculated the storm could impact as much as nearly 50% of their pipeline.
Sandy has undoubtedly placed the lives of many on hold for the time being, and now that she has gone, lenders will have to strive to reach normal production volumes.
Written by Jason Oliva