National lenders funding new home construction are currently facing natural disasters that can affect about one in seven projects, according to Built Technologies, a fintech provider.
The company recently began pursuing projects in the Federal Emergency Management Agency declared disaster areas three months ago after customers raised concerns that the risk was increasing, said Chris Boyd, vice president of product at Built.
"With all of the natural disasters across the country, we've been thinking about what we can do to help home builders," he said, adding that clients couldn't always tell immediately which of their projects were affected.
The company found that around 15% or 7,316 of its customers' roughly 48,000 projects were in disaster areas after the federally declared disaster areas were assigned to the projects it is helping lenders manage.
Built primarily manages construction or consumer loans for the new construction of single family homes. It also helps lenders manage a smaller number of commercial or apartment building projects. The company is used by more than 100 construction lenders and thousands of homeowners and contractors to manage loans that are worth over $ 40 billion in construction projects to date.
The company found that for its customer base, the top five states with the highest number of projects affected were: North Carolina (3,544), Texas (1,725), Florida (1,302), Louisiana (555), and Connecticut (234). These areas were hit by storms like Hurricanes Laura and Isaias. California, which was recently hit by forest fires, ranked sixth with 153 potentially affected projects.
Not all projects in the disaster areas have necessarily faced adversity, but the risk is high, Boyd noted.
In addition to tracking the effects of natural disasters, the company recently helped lenders track the effects of local building restrictions put in place to counter the effects of the coronavirus. According to an assessment of the loans on the Built system, more than 4,000 projects in Washington, Massachusetts, New Jersey, Louisiana, Kansas, and California have had state-imposed coronavirus construction breaks at one point. By early June, however, the number of construction breaks on projects had halved and continued to decline rapidly in response to states opening and lifting restrictions.
Damage from natural disasters can have longer-term effects on construction projects.