Axios - Extreme weather worsened by climate change and insurance market gaps together create systemic jeopardy for mortgage providers, the risk modeling group First Street finds.
Its granular new report is the "first national-scale analysis of the relationship between physical climate risk and mortgage defaults," First Street said.
"Climate-driven foreclosures" could bring $5.36 billion in annual bank credit losses by 2035 during "severe weather years" — nearly 30% of all foreclosure losses, the report finds.
- Climate change can worsen several kinds of threats, such as wildfires. But flooding is the "leading climate driver of foreclosure risk," as many insurance policies don't cover it.
- FEMA's method for creating its Special Flood Hazard Areas, where insurance is required, leaves out millions of properties facing risk, First Street said...
Florida, Louisiana, and California are projected to account for 53% of climate-related mortgage losses in 2025, First Street finds.
- While Trump 2.0 regulators are backing away from climate, First Street's Jeremy Porter said the group's data is already used by parties like Fannie Mae and Freddie Mac, and various Wall Street giants and mid-sized banks.
- "Their questions to us were actually the impetus for the research," he said via email.
... The bottom line: "Mortgage markets are now on the front lines of climate risk," Porter said in a separate statement alongside the report.
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