Housing in the Aftermath of Harvey, Irma and Maria

(Oct. 2017) For communities in Texas, Florida, Puerto Rico, and the US Virgin Islands, time and memory will always be separated into “pre” and “post” Harvey, Irma and Maria. With record levels of damage from floods, hurricane-force winds, and widespread loss of electricity, some homes and entire communities in these areas will remain blighted for months and years to come.

Those of us who have worked in blighted neighborhoods across the country – some ravaged by natural disaster and others by economic disinvestment or predatory lenders – have learned a number of important lessons in recent years.

The most important lesson is that time is of the essence. The faster that homeowners can secure their homes, remediate health hazards, and make repairs needed for basic habitability, the better. The longer a home or apartment remains vacant, the more likely it is that the damage will never be repaired. Especially in areas that have suffered from flooding and loss of air conditioning, mold and vandals alike will ravage the house rapidly, in some cases in a matter of days.

What’s more, blight begets blight. One vacant property on a block will reduce property values; multiple vacant properties will reduce them even more. Once values fall to the point where the cost of repair exceeds the value of the home, owners will abandon the property. Keeping a neighborhood intact requires an intentional and coordinated effort at a community level.

In hard-hit areas overwhelmed by vast inventory of abandoned homes, we know that local control of property can help preserve resident and neighborhood wealth and investment. Land banks can serve as a vital tool in the housing market recovery; Cleveland, Chicago, Flint and Detroit metro areas provide examples of effective land banking practices. Land banks can secure distressed, vacant properties; assemble parcels to meet community redevelopment needs; and act as a firewall against rampant speculation from out-of-state investors looking to strip mine devastated communities by buying and holding blighted properties for pennies. Organizations like NCST can also play a significant role in helping to manage distressed and vacant low-value properties in a way that prevents lasting blight.

There are other lessons we have learned about disaster-driven blight in the aftermath of Sandy and Katrina as well. Contractor and insurance adjuster shortages and price gouging will add delays and costs to already struggling housing recovery efforts. Although a massive number of affected homeowners were uninsured against flood – including more than 80% of Harvey victims – those due to receive insurance payouts often end up frustrated by the time-consuming, bureaucratic process. In a report released last week, the Center for American Progress (CAP) made a number of policy recommendations to aid the most vulnerable in the rebuilding effort, including requiring servicers to release partial insurance payouts to affected homeowners up front, to enable them to secure their homes from further damage and exposure to the elements.

In addition to FEMA aid, both homeowners and tenants have sources of assistance that they did not have a decade ago. In response to the Great Recession, the mortgage industry has created a robust loss mitigation infrastructure designed to help both homeowners and investors on a scale that simply did not exist before 2008. For homeowners in disaster areas with mortgages held by Fannie Mae and Freddie Mac or insured by the Federal Housing Administration, short-term relief from mortgage payments, foreclosure filings and evictions is already in place, although only for three months initially. Consumer advocates support extending initial relief for longer, especially in the most devastated locales, and ensuring that homeowners are not hit with big bills to repay while they are still rebuilding their homes and lives.

Other policy analysts have suggested requiring servicers assisting homeowners in disaster areas to proactively evaluate these borrowers for affordable rehab financing options when considering them for mortgage modifications. This idea is worth further consideration, and should also include assistance for community development organizations and other nonprofit housing developers who will be working to restore the abandoned homes that are left behind.

Many of these communities are still in the immediate response and recovery effort. Once the full scope of the damage is assessed, resources will turn from rescue to rebuilding. NCST looks forward to working with homeowners, lenders, servicers, municipalities, and other stakeholders to prevent these already damaged communities from facing a second disaster: a generation of neighborhood blight.

If you have comments, please email those to Julia Gordon.

This column was originally published in October 2017.