Puerto Rico Faces ‘Housing Meltdown’ in Maria’s Wake
December 18, 2017
Puerto Rico is bracing for a “housing meltdown” and foreclosure crisis after Hurricane Maria nearly destroyed the entire island in September, The New York Times reports. About one-third of Puerto Rico’s 425,000 homeowners are behind on their mortgage payments, and about 90,000 of those delinquencies are due to Maria, according to real estate data firm Black Knight Inc.
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Puerto Rico’s foreclosure and delinquency rate now stands at 35 percent—more than double the rate on the U.S. mainland in 2010, during the depths of the housing crisis. “Thousands have lost their jobs, thousands of small business have closed, and thousands more have left the [island],” Ricardo Ramos-González, coordinator of a consumer legal aid clinic at the University of Puerto Rico School of Law, told the Times. “If there is no income, the people cannot make payments.”
The federal government—which governs Puerto Rico as a U.S. territory—has imposed a temporary moratorium on foreclosures, and many lenders have agreed to waive late payments. But the moratorium, backed by Fannie Mae and Freddie Mac, is due to expire Dec. 31, although many housing analysts predict it will be extended. A moratorium imposed by the Department of Housing and Urban Development will expire on March 18. Once the moratoriums expire, “we will see an avalanche of [foreclosure] cases,” says attorney Josue Castellanos-Otero.
The rebuilding of Puerto Rico has become much bigger than repairing damaged homes, but banks and investors will need to modify troubled mortgages to keep homeowners in their homes. Further, the “mass exodus” of Puerto Ricans moving to the continental United States means the demand for housing “has gone down substantially,” Laurie Goodman, director of the Urban Institute’s Housing Finance Policy Center, told the Times.
Source: “The Next Crisis for Puerto Rico: A Crush of Foreclosures,” The New York Times (Dec. 16, 2017)
Updated: September 21, 2018