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Hurricane Harvey
Officials
estimate up to 40,000 homes were destroyed in the Houston
area.

AP/David J.
Phillip


  • Tens of thousands of Texans have been driven from their
    homes after dangerous flooding from Harvey.
  • Officials estimate up to 40,000 homes in the Houston
    area could be destroyed.
  • Less than 20% have flood insurance, leaving people to
    rely on FEMA to help replace belongings and rebuild their
    homes.

Since Hurricane Harvey
made landfall in Texas
last Friday, dangerous flooding has
driven tens of thousands of people from their homes, leaving
“unprecedented”
rainfall and winds to wreak havoc.

Officials estimate that
up to 40,000 homes
in the Houston area — a city of more than
two million people — have been destroyed.

The coastal areas of Rockport and Port Arkansas, which are close
to where the storm made its first landfall, were
heavily damaged,
as were
the nearby cities of Port Arthur and Beaumont
.

Aerial
photos
of the aftermath in Houston show entire neighborhoods
submerged in water.

But as Harvey begins to subside —
the tropical storm made a second landfall
in Western
Louisiana on Wednesday with lower wind speeds of 40 mph — the
financial toll on survivors is just beginning.

Over the coming days and weeks, tens of thousands of Texans who
fled their homes for safety will return to devastating scenes.
The recovery process — from salvaging personal belongings to
catching up on mortgage payments to dealing with insurance
companies — will be long-lasting and could leave many people in
financial ruin.

Mortgage payments

In Houston and nearby areas impacted by the storm, there are
“more than twice as many mortgage properties with nearly four
times the unpaid principal balance” as there were in the counties
hit by Hurricane Katrina in 2005,
according to data cited by CNBC
from Black Knight Financial
Services.

An aftermath on par with Katrina could mean 75,000 Houston
borrowers may fall behind on their mortgage payment in the next
two months, and 45,000 could become “seriously delinquent” within
four months.

Mortgage lenders Fannie Mae, Freddie Mac, and the Federal Housing
Administration (FHA) are offering some relief for homeowners
affected by Harvey,
forbearing mortgage payments at least 90 days
, and
potentially up to a year. Borrowers won’t have to make their
monthly payments and no penalties will apply, though interest
will still accrue.

Flood insurance

Only 17% of the homes in the eight counties left in Harvey’s wake
have flood insurance, which can cost homeowners anywhere from
$500 to $2,000 annually depending on the location,
according to the Washington Post
.

For the more than 80% of homeowners without flood insurance,
private charity and grants from the Federal Emergency Management
Agency (FEMA) is all they have. At the high-end, a homeowner who
can prove their house is unlivable can be given up to $33,300
from FEMA. Still, the process can take weeks or months after a
disaster like Harvey.

A lack or delay of funds could force many people into debt or
bankruptcy, particularly if a home is the most valuable financial
asset they own.

“There are some early indications that this is going to have an
exceptionally large impact on the number of people who are
totally uninsured,” Howard Mills, the global insurance regulatory
leader at Deloitte,
told Quartz
.

Most flood insurance policies are issued through the
government-run National
Flood Insurance Program
(NFIP), which is already $25 billion
in debt after payouts from Hurricanes Katrina and Sandy. Those
policies will cover up to $250,000 in rebuilding costs for
structural damage to residential properties.

Filing a
claim
is the first step, and then homeowners will need to
document the damage with photos and make an appointment for an
adjuster to visit. As thousands of people move through this
process simultaneously, claims and payments are likely to be
delayed.

Replacing belongings

Legendary investor Warren Buffett — whose company Berkshire
Hathaway owns Geico and several other insurers —said
it’s likely that 10% of the vehicles Geico insures in the Houston
area will have to be replaced.

Flood insurance policies through FEMA will replace damaged
personal belongings such as clothing, TVs, and furniture up to
$100,000. But with the vast majority of homeowners in the area
uninsured, the losses could be immense.

Managing money

Tens of thousands of people quickly evacuated their homes before
Harvey’s first landfall, possibly leaving behind important
financial documents, like social security information, tax
documents, insurance policies, and mortgages. These are all
replaceable,
but may take some time.

The Federal Trade Commission
suggests
reaching out to credit card companies, lenders, and
other financial institutions to ask for help. Many could be
willing to defer payments, extend grace periods, waive late fees,
postpone collection or foreclosures, or raise credit limits.



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