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76 Hidden deep in the news on July 22 was the report that Tropical Storm Gonzalo was forecast to become a hurricane. at same day, it was reported that a tropical depression was slowly gaining strength in the Gulf of Mexico. Although it was too early to predict the eventual impact these storms might have on the U.S., the reports were cause for concern. HURRICANE SEASON IS UPON US COVID-19 has dominated the news for the past several months, and consequently, we have tended to overlook the reality that there have already been six tropical storms in the 2020—a record for this early in the year. In fact, for those who are counting, there have been 24 major disaster declarations up to July 10th. Lest we be lulled into a state of complacency, we need to understand the seriousness of the situation we are facing. In the Northern Atlantic Ocean, a distinct hurricane season occurs from June 1 to November 30, sharply peaking from late August through September; the season's climatological peak of activity occurs around September 10th each season. Weather.com reports that seasonal forecasts continue to call for a hyperactive Atlantic hurricane season in 2020, well above the 30-year average. DELINQUENCY RATES Historically, the impact of hurricane season on mortgage delinquencies is significant. Studies indicate that post-disaster delinquencies for impacted areas increase more than 100% and often remain high for years. e effect during a pandemic could be even more calamitous. Following a dramatic rise associated with the subprime mortgage crisis of 2007-2010, the U.S. mortgage delinquency rate had been trending back towards the long-term average over recent years. en, COVID-19 changed everything. In March, as the coronavirus began to affect the U.S. economy, just 3.39% of borrowers were delinquent. However, as per Black Knight's May 2020 Mortgage Monitor Report, the nation's overall delinquency rate for this April reached its highest level in more than eight years. According to Frank Nothaft, Chief Economist for CoreLogic, "e COVID-19 pandemic has shocked our economic system and led to unprecedented job loss, reducing the ability of affected families to make their monthly mortgage payments. e latest forecast from the CoreLogic Home Price Index shows prices declining in 41 states through April 2021, potentially erasing home equity and increasing foreclosure risk." Of the 19 states that exceeded the national average for noncurrent mortgage loans in May of 2020, nearly all fall in areas that are prone to exposure to tropical storms and hurricanes. Combine high current mortgage delinquency rates with a high potential exposure to disastrous storms during a hyperactive hurricane season, and the cause for concern is obvious. UNEMPLOYMENT In addition, COVID-19 has relegated many Americans to the unemployment rolls. e Pew Center reported in June that unemployment rose higher in three months of COVID-19 than it did in two years of the Great Recession. e number of unemployed soared from 6.2 million in February to 20.5 million in May 2020. e U.S, Bureau of Labor and Statistics reported on July 17 that the national unemployment rate was 11.1%, or 7.4 points higher than it was in June of 2019. THE INSURANCE GAP Ninety percent of all natural disasters in the U.S. involve some type of flooding. Unfortunately, few homeowners purchase flood insurance. For example, 80% of Texas homeowners and 60% of Florida homeowners do not have flood insurance. e insurance gap is significant, and its ramifications are serious. e online environmental magazine Grist reports that while 62% of homeowners across the nation say they are prepared for a flood, just 12% of them have flood insurance. As we enter the high season for disasters, the Harris Poll found that people have little interest in buying flood insurance because the coronavirus pandemic has hurt them financially. Without insurance, relief from floods primarily comes in the form of loans. For many in this difficult time, a loan is not an option. Disaster victims do not need more debt—they need debt relief. So, let's put this all together: A CONFLUENCE OF EVENTS In a year of economic, health, and disaster crises, the importance of the IRS Casualty Loss Program has never been more apparent. Quick Take By: Mark Stockton

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