Mortgage Foreclosure in Post-Katrina New Orleans

Abstract

Hurricane Katrina caused widespread property destruction in the city of New Orleans. This Article analyzes data gathered from the Orleans Parish Recorder of Mortgages office and the Civil District Court and concludes that foreclosure filing rates in the year after Katrina decreased significantly from the rates for the corresponding period in the year prior to the storm. This Article evaluates in detail the legal and market responses to mortgage default after the storm that contributed to the reduction in foreclosure actions. Secondary mortgage market initiatives provided the principal means for relief; however, even though these initiatives were successful in protecting mortgage debtors after Katrina, their limited scope make them inadequate to address the years of financial distress that might likely follow any future disaster of Katrina's magnitude. Thus, although the experience demonstrates that secondary market interventions can effectively reduce debtor distress after a major disaster, such interventions should not be seen as a substitute for traditional legal responses to mortgage debtor distress after disasters or other economic crises.