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Thursday, March 21, 2024
Mortgage Delinquencies Spike After Lahaina Fires
By UHERO @ 6:38 PM :: 1429 Views :: Maui County, Hawaii Statistics

Delinquencies have spiked in the aftermath of the Maui wildfires

by Daniela Bond-Smith, UHERO, March 21, 2024

The devastating Maui wildfires destroyed most of Lahaina and displaced thousands of residents. But many Lahaina homeowners still have mortgages on their properties despite not having a home to go back to. As of the 2020 Census, almost three-quarters (74%; 1309 out of 1773) of Lahaina homeowners did not own their home free and clear. Even with various housing assistance programs in place, additional costs for temporary shelter and daily expenses are mounting for displaced West Maui residents, and it is no surprise that many of them struggle to make regular mortgage payments. 

UHERO analyzed proprietary loan-level data from Black Knight to report on the number of excess delinquencies since the Maui wildfires up until the end of November 2023. Figure 1a shows both the number of loans that have become newly delinquent in a given month and the number of total delinquencies by month in zip code 96761, which includes Lahaina and Kaanapali. A sharp spike is evident following the August 8 wildfires, peaking in September. In total, 296 mortgages have been delinquent sometime in the period between August and November 2023; only 17 of which had already been delinquent in July 2023 prior to the fires. Figure 1b shows that the September 2023 jump in delinquencies is by far the most severe in recent history, far surpassing the highest peaks at the height of the Covid pandemic in 2020. Not only is the September 2023 monthly increase of new delinquencies substantially higher than Covid-era monthly delinquencies counts, but also the total number of delinquent loans exceeds the November 2020 Covid peak.

While new delinquencies declined in October and November 2023, the total stock of delinquent loans remains high. Further data analysis shows that once mortgages in Lahaina had become delinquent, homeowners tended to remain unable to make payments. Only 30% of the mortgages that had become delinquent in the aftermath of the Maui wildfires have become current again by November 2023, the end of the reporting period. All the while, arrears balances have climbed over time, as shown in Figure 2. The median arrears balance for Lahaina mortgages that have become delinquent since the Maui wildfires and remained delinquent for four months was $9,360. With the majority of mortgages remaining delinquent over time, the balance in arrears will keep rising. Over the 4-month period observed in the data, the total arrears balance for mortgages in Lahaina that have become delinquent since the Maui wildfires already stands at more than $1,200,000. Clearly the observed time series is short and more data is needed to get a clearer picture of future trends. However, given the overall uncertainty of the disaster recovery, it is likely that for many of the affected families financial difficulties remain for the foreseeable future.

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