Puerto Ricans face foreclosure wave as moratoriums expire
SAN JUAN, PUERTO RICO — Aylsa Torres sighed in relief when she received a letter from her bank two weeks after Hurricane Maria hit. She was among the hundreds of thousands of Puerto Ricans awarded a threemonth moratorium on their mortgage payments as the U.S. territory reeled from the storm’s destruction.
Believing she was temporarily freed from those financial obligations, the 46-year-old government worker drained her savings to pay for a $750 generator and $786 worth of repairs for storm damage. But when Torres visited her bank in December, she says, she was shocked to hear that she was behind on payments and that officials threatened to foreclose on her apartment and ruin her credit rating.
Confusion and panic is spreading across this U.S. territory as the majority of moratorium agreements expire this month, with many people discovering they never qualified for the moratorium in the first place or struggling to obtain extensions because they cannot pay what is owed to the banks.
“It’s incredibly frustrating,” Torres said. “You feel like everyone is closing a door in your face. No one has a genuine interest in helping you.”
Legal experts say it is a scene that will repeat itself in the coming weeks and months on an island that already was seeing a sharp rise in foreclosures before the hurricane as a result of an 11-year-old recession that has forced government austerity measures.
Even worse, experts say, many Puerto Ricans stopped making payments on their mortgages after the Sept. 20 storm because they thought the moratorium was automatic, when it was not. The storm knocked out power across the island, the largest blackout in U.S. history, preventing many from learning that they had to contact their bank to request a moratorium, said Ariadna Godreau, a professor and human rights lawyer.
“The big concern now is that mortgage foreclosures are going to spike,” she said. “We’re going to see more homeless people, more homes foreclosed.”
Over almost a decade, the number of repossessed homes in Puerto Rico grew from more than 2,300 in 2008 to above 5,400 in 2016 and an estimated 6,200 or more last year.
After the storm, foreclosures were temporarily suspended, and banks in the U.S. territory offered a moratorium on mortgages for those who qualified, as did the federal government. Moratoriums offered by the U.S. government have been extended to March, but banks have ended theirs.
Banco Popular, which is Puerto Rico’s largest bank, said more than 20,500 clients received moratoriums that expired in December and January. Bank executives say they are working with their clients, but stress that they still need to collect what is owed.