The immense ramifications inflicted by natural disasters are detrimental to both directly impacted consumers and the financial institutions that serve them. Having strategies in place to help mitigate the harmful effects of these events can provide consumers with immediate relief and limit the risk of defaults. Most recently, Hurricanes Harvey, Irma, and Maria destroyed the property and livelihood of millions of consumers across the Atlantic, Gulf and Caribbean coastal regions. Initial estimates indicated that more than 100,000 homes would be damaged or destroyed due to Hurricane Harvey alone. Further, Harvey has the potential to cause first delinquencies for 300,000 mortgages and severe delinquency for 160,000 borrowers. Soon after Hurricanes Harvey and Irma made landfall, wildfires destroyed vast portions of northern California. The fires destroyed over 5,700 structures while displacing nearly 100,000 people. The extent of Hurricane Maria’s impact to Puerto Rico’s economy and infrastructure remains unknown while damage assessment and recovery efforts continue.
These unprecedented natural disasters have been particularly detrimental for low-income families. The most recent round of damage caused by the California Wildfires and Hurricanes Harvey, Irma and Maria is estimated to reach over $360 billion, with affected areas bearing the financial burden for years to come. Many consumers and business owners will struggle to rebuild damaged property or ensure timely payments and thus will be faced with the long-term financial consequences of delinquency.
Financial institutions are in a unique position to assist consumers in times of distress and help mitigate the adverse impacts of natural disasters.
Special thanks Savannah Xiao, who contributed to this article.