Climate change is expected to increase the frequency and severity of floods in the U.S., posing greater risks to homeowners and mortgage lenders—and since flood damage tends to lower the market value of affected homes, it’s more likely that homeowners will default, especially if that damage is not covered by insurance.
Those are among the assertions in a new working paper from the Congressional Budget Office.
The paper out this week, “The Effects of Flood Damage on the Subsidy Cost of Federally Backed Mortgages,” uses data on mortgages and expected flood damage for residential properties to examine how much flood damage is expected to increase the cost of
federally backed mortgages and it uses those estimates to determine the budgetary effects of mortgages guaranteed directly by the