"Extreme weather events are now more than just an occasional disruption; they are redefining the landscape of housing finance. And, the frequency and intensity in which these events occur, combined with rising insurance and utility costs, fluctuating property values, and shifting housing rates, provide challenges for lenders looking to effectively streamline operations, mitigate risk, and support their borrowers. For many lenders, gaining insight into the potential and actual impact of climate disasters on their loan pipeline has lacked in providing the full picture."
"Lenders have traditionally relied on data at the county level under FEMA, which is not granular enough to identify impacted properties or assess future vulnerability. For instance, ICE's October Mortgage Monitor report indicated that 5.3 million mortgaged homes face a 1-in-100-year flood risk, which amounts to a 1-in-4 chance of flooding during a 30-year mortgage term. Yet 85% of these homes lack flood insurance, and many are located outside of a FEMA-designated high-risk area."
Extreme weather and rising costs are transforming housing finance and creating new operational and credit risks for lenders. County-level FEMA data is insufficiently granular to identify individual property impacts or future vulnerability, leaving lenders blind to pipeline and portfolio exposure. Millions of mortgaged homes face significant flood risk, yet most lack flood insurance and many are outside FEMA high-risk zones. This gap undermines lenders’ ability to assess damage, allocate resources, pause or fund loans appropriately, and communicate effectively with affected borrowers. Comprehensive property-level data and advanced analytics are required to deliver actionable visibility and manage climate-driven risk.
Read at www.housingwire.com
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