The damage caused by Hurricane Irene could create problems for homeowners in the affected areas to close on both pending home refinancing as well as mortgage purchase applications.
It’s likely that they’ll have to have a re-inspection completed on the property by the original appraiser, to verify that no damage was been done and that the value of the home did not change by the storm, according to a recent statement by John Walsh, president of Total Mortgage Services, which is a lender based in Connecticut.
Homeowners who had pending home purchase and refinancing applications in FEMA-designated disaster areas before the hurricane are the ones most likely to be affected by this issue.
According to FEMA, at least 11 states are designated as federal disaster areas impacted by last weekend’s storm. Walsh also said that somewhere between 15% and 50% of his firm’s pending mortgage applications will require a new inspection.
Requiring re-inspections does not mean all of those properties were actually damaged by the storm, but the costs and delays are frustrating for both applicants and lenders. For instance, a homeowner who has already sold their previous residence would face a significant challenge if the home they were purchasing is one of the many now severely damaged by the storm.
“If I’m buying that house and I can no longer purchase it, and I’ve already sold my own home, the domino effect of that could be a big problem,” Walsh said.
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