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Mortgage bankers see changing market as region recovers

The effects of Hurricane Katrina’s devastation of homes in South Mississippi are being felt by mortgage bankers as they assist customers with recovery and rebuilding.

Hancock Bank, headquartered in Gulfport, is a key player in the industry Coast wide. Dan Zoble, vice president and mortgage lending manager for the bank’s four-state market, said the hurricane forced businesses and individuals of the Coast communities to button down the hatches and run for cover, scurrying to find shelter and the basic necessities to survive.

“Katrina directly impacted a large portion of Hancock Bank’s operations and customer base from Mobile to Baton Rouge,” he said. “The intensity and extent of this storm tested our resolve and ability to recover as no other storm in our history. The good news is that both Hancock Bank and our customers have discovered that we all have tremendous survival instincts. Working as a community, our resolve is just as intense and our abilities just as extensive as Katrina’s wrath.”

He says Hancock Bank provided assistance by opening branch locations as quickly as possible. The Call Center set up a triage operation in Denham Springs, La., and the mortgage division was up and running from its Baton Rouge, La., offices shortly after the storm.

“Even though many of our employees were victims of the storm, they put their own problems aside and got down to the business of helping our customers,” Zoble said. “I can’t say the office itself was a thing of beauty but we were getting the job done in spite of circumstances.”

BancorpSouth Bank’s Mortgage Division also jumped in quickly to aid customers. “We took people from Tupelo and put them on the ground on the Coast so our customers could meet face-to-face with mortgage people who were trying to help them,” said Bill Edwards, president of the mortgage division. “We opened two locations so customers wouldn’t have to mail insurance checks to Tupelo and could get a portion of their funds when they walked in the door.”

Although there were waiting lines for weeks, Edwards says that was better than having to call “800” numbers and getting put on hold. The additional mortgage employees are still servicing customers on the Coast. “We will keep people there as long as needed, but we may consolidate this service with the six mortgage offices that are always there,” he said. “The Coast is one of our most important markets and we’re sensitive to the needs of customers there.”

Edwards said the BancorpSouth Mortgage Center located on U.S. 49 north of Interstate 10 never closed even when water was seeping under the door.

Hancock Bank’s Zoble says the mortgage industry has never had to face disasters of the magnitude of hurricanes Katrina and Rita. Even mortgage giants like Fannie Mae or Freddie Mac had little or no past experience that could have prepared them for this scenario.

“However, most lenders had disaster procedures in place. Those procedures allowed for immediate 90-day deferrals and gave mortgage servicers a great deal of latitude in working with the storm victims,” he said. “These procedures were based on past experiences and hinged on the assumption that 90 days was sufficient time for lenders to have a clear picture of what would need to be done going forward.”

At the end of the first 90 days, he says the only thing that was clear was that everyone needed more time. “Perhaps as many as half of our borrowers had not even seen an insurance adjuster, much less received a claim check,” he said. “Both Freddie Mac and Fannie Mae announced additional 90-day forbearance periods, and most of the industry followed their lead. Now as we near the end of this additional 90 days, we are beginning to get a handle on the actual damages and potential losses.”

Special programs for storm victims are rolling out from almost every corner of the mortgage industry, he says. He feels the industry will end up with some losses but will also have the satisfaction of knowing it pulled together and did a great deal to help homeowners with their immediate issues and provided them options tailored for the long-term recovery effort.

Edwards says the long-term outlook for the housing market continues to remain strong and that BancorpSouth has a good outlook for the next year. “History tells us the Coast will recover. We’re very encouraged by the market and the rebuilding efforts,” he said. “The supply and demand is there, and there are not enough houses for the market.”

He says the bank’s volume of loan applications has increased so much they’ve hired additional originators.
Zoble says the long-term effects on housing in South Mississippi are likely to be positive. “We have the opportunity to improve the quality, variety and availability of housing,” he said. “We are going to see new activity in housing, ranging from condominium projects to traditional residential development. Even though the activity in the mortgage industry may be slowing in many markets across the country, we expect the mortgage business in South Mississippi to be strong for the next couple of years.”

He added that the immediate need for housing is already resulting in rising property values in many areas. It’s likely the inventory of available properties will dwindle and the volume of purchase transactions will shrink for a while until repaired or new properties become available. Refinancing transactions are also likely to increase as homeowners go through some degree of renovation or reconstruction.

Although The Peoples Bank of Biloxi is primarily a commercial bank, president Chevis Swetman is in tune with the housing market and sees a real building boom on the Coast for the next three to five years. His bank lends funds to builders and developers who in turn deal with homeowners.

“There is so much housing that needs to be replaced, there will really be good activity for the next few years,” he said. “It will take that long to get back to the pre-Katrina level and we’ll have spectacular growth.”

Swetman says he’s seeing a lot of payoffs on homes that were destroyed. “We’re seeing more of that as more insurance companies and adjusters come around,” he said. “If the loan is being paid off, we’re requiring that all insurance proceeds be paid on the loan or put into an escrow account.”

He warns that homeowners may be penalized by the Small Business Administration (SBA) by trying to do the right thing with the mortgage. “They need to be very cautious about their insurance proceeds and get a letter from the lender requiring the proceeds be applied to their mortgage. The letter would satisfy the SBA,” he said.

He also sees a different twist as homeowners sell their damaged homes and use the insurance proceeds to build elsewhere. “It’s great if they’re doing it for themselves and want to build out in the country to get away from the water,” he said. “Some property owners on the east end of Biloxi are selling to condos, and I think we’ll see more of that, too. They can sell out and not worry about their future. Some property is selling for more than $2 million per acre.”

Contact MBJ contributing Lynn Lofton at llofton656@aol.com.

About Lynn Lofton

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