Leveraging Disaster Data to Manage Pipelines During Hurricane Season

Hurricane season began June 1 and extends to November 30, which means six months of potential major weather events lie ahead. Early predictions for the 2022 hurricane season indicate above-average activity – forecasting 19 named storms and nine hurricanes, with weather patterns echoing conditions similar to 2005, when Katrina, Wilma and Rita all made landfall in the United States.

With climate change revving up property damage, mortgage lenders and servicers need systems in place to help them form fast, informed responses to natural disasters that keep homeowners and their homes safe.

The Challenge for Lenders and Servicers

When a hurricane strikes, lenders typically rely on the Federal Emergency Management Agency (FEMA) for disaster impact data. But using FEMA data can be problematic because it is too broad (indicating counties affected) and stale (often lagging by days or weeks). As a result, lenders often are left to identify which homes and homeowners are impacted by disaster manually – a time-consuming and resource-intensive task.

In times of crisis, lenders need to be able to simultaneously service and communicate with borrowers impacted and protect their properties and portfolio. Without timely, accurate data, lenders are at a severe disadvantage in creating a timely response both internally and to the borrowers they serve.

The Power of Better Data

While FEMA disasters are reported at the county level, the Black Knight Early Warning Suite disaster intelligence solution, which is part of the Black Knight Actionable Intelligence Platform℠ (AIP℠), enables lenders to understand the breadth of impact with greater precision – down to the parcel level. Through an integration with Black Knight’s Empower LOS, Early Warning Suite can identify addresses impacted by disaster, match them with active loan files and notify lenders when loans in their pipeline have been affected. The ability to geocode and define boundaries of a disaster as it moves and unfolds keeps lenders ahead of FEMA data. What’s more, the timeliness of Early Warning Suite data helps lenders more efficiently quantify losses while also building better borrower relationships through effective disaster response plans.

Real-life applications of disaster intelligence for lenders are manifold. For one, having the ability to accurately identify the effects of a natural disaster down to the property level enables lenders to close loans on unaffected properties adjacent to disaster-affected areas faster. It also helps lenders identify which loan files will require lock extensions, a new appraisal or collateral evaluation. Disasters also significantly impact the mortgage portfolio by increasing mortgage defaults and prepayments, which are all risks that need to be effectively managed – better data can allow lenders to do this more quickly and effectively than with FEMA data alone.

There are also the immense customer service applications of such technology, which enable lenders to prepare a better disaster response for their borrowers in affected areas by creating a response plan and staffing the call center accordingly. Responsiveness to customer needs during a disaster inspires customer loyalty and builds reputational goodwill.

Learn more about the Early Warning Suite and how it can provide the information lenders and servicers can use to take the right action at the right time here.