What effect, if any, do you think recent Natural Disasters will have on defaults

[yojoakak]

What effect, if any, do you think recent Natural Disasters (e.g. SuperStorm Sandy) will have on default rates from those regions affected?

[FrankieC]

I have a couple Grace Periods from NY. Could be a coincidence, though. My sample is too small to be representative.

[John]

Initially, I think there may be some late late and/or charged off loans due to the disruption to incomes as well as additional expenses.  Later as people come to terms with their situations there may be an increase in loans to bridge over loss of income and replacement costs of damaged property. 

I'd like to hear what other people think about loans for personal disaster relief.  When I read about someone's ill fortune or health issue I feel bad for that person's situation but tend to think it would be a higher than normal loan risk.  Any comments?

[faeriering]

I tend to take the health issues as a case by case basis.  If someone had a family health issue a couple years ago, racked up huge amounts of CC debt, but is now healthy, and working, and they meet the rest of my criteria, I tend to look at that pretty favorably.  If they are in the midst of a health issue, that's a harder call.  I want to be able to help them, and the only way they will be able to work and pay back the loan is if they are healthy, but without details about the health issue, it's seriousness, and their prognosis for getting better (all of which they really shouldn't be sharing on a public forum anyway), it's hard to make a good decision about the risk of the loan defaulting.

For instance my dad was crippled with damage to his sciatic nerve while working on the roof.  He was on some serious pain meds and had lost a lot of his mobility.  He had a minor back surgery a year after the incident after trying all kinds of other treatments.  Now he has most of his mobility back and is off pain meds and can continue to work on the house.

So I don't really have a good answer for the health stuff.

In terms of disaster relief, there are lots of places for folks to get help FEMA + home owners insurance for their houses, so I'm not sure I would trust some one asking for money to rebuild.  Maybe that's naive of me.  I would expect some late loans or missed payments from existing loans.  Since I generally try to sell loans that have ever been late, I don't think I would change that perspective regardless of geographical location.