LAUREN BUNTING ¦ Contributing Writer
(Nov. 9, 2012) In the wake of Superstorm Sandy, real estate sales and refinance timelines are being affected. Homes that were under contract and scheduled for a settlement have been experiencing delays due to banks requiring the homes to be re-inspected for storm damage; in some cases, by the original appraisers. In other cases, the banks are allowing borrowers to accelerate the process by simply submitting photos as evidence that the home scheduled to settle did not suffer any storm damage.
But for those in the hardest hit areas along the northeast, the storm most likely delayed or even completely terminated purchases. If the house has repairs, the loans won’t close until those repairs are completed, and if the repairs are extensive and take longer than the agreed upon settlement date in the contract of sale, then the buyer can likely walk from the deal. Especially with Federal Housing Administration loans, which have stricter inspection policies surrounding safety and structural concerns.
In addition, the FHA has announced it will suspend foreclosures for 90 days in disaster-affected areas throughout New Jersey, New York, Connecticut and Rhode Island. HUD also makes mortgage insurance available under its Section 203(h) program, which provides FHA insurance to disaster victims who have lost their homes and are facing the daunting task of rebuilding or buying another home. Borrowers from participating FHA-approved lenders are eligible for 100 percent financing.
According to the National Association of Realtors chief economist, Lawrence Yun, a regional drop in activity is expected after a storm of this magnitude. He anticipates a drop large enough to pull the national sales statistics down for November. However, he notes, “With past natural disasters, home sales pause, but what generally happens is in later months, as insurance money begins to flow in, the housing market gets elevated to higher levels than before the storm.”
— Lauren Bunting is a member of the Coastal Association of Realtors and a licensed REALTOR® with Bunting Realty, Inc. in Berlin.