Good News: Democrats Employee Feddie And Frannie To Address Climate (scam) In Mortgages

This shouldn’t have any impact on mortgages from pretty much all lenders, right? It’s no big deal when a person has been in public service for decades and somehow made millions

CASTEN, WHITEHOUSE URGE FANNIE AND FREDDIE TO ADDRESS CLIMATE RISK FOR HOME MORTGAGES

U.S. Congressman Sean Casten (IL-06) and Senator Sheldon Whitehouse (D-RI) sent letters to Fannie Mae and Freddie Mac questioning the Enterprises on how they assess and manage climate-related risks for the home mortgage loans they purchase and hold.

“The U.S. mortgage market faces severe challenges due to climate-related factors, including underinsurance, increasingly unaffordable or unavailable insurance, the over-representation of under-capitalized insurers in high-risk areas such as Florida, the transfer of high climate-risk mortgages to [the Enterprises], and a high percentage of GSE-backed loans without flood insurance,” the lawmakers wrote. “These issues are a result of the destabilizing effects of climate change. We believe that how [the Enterprises] assesses and manages these risks will be crucial in maintaining stability.”

In recent months, Hurricane Helene’s destructive path across the Southeast has spotlighted the lack of flood insurance coverage in areas that have been historically perceived as ‘less risky.’ Less than 1% of the inland areas that sustained the most catastrophic damage were protected with flood insurance. Both Fannie Mae and Freddie Mac have identified flood insurance as an important risk mitigation measure for future climate-related losses to their portfolios. However, the GSEs require flood insurance only for their loans in high-risk areas (i.e., FEMA-designated flood zones and coastal areas), and have no stated requirement for medium and lower-risk areas, leaving homeowners unaware of potential flood risks to their property. As a result, there are serious concerns that the real estate markets have underpriced flood risk, where home values do not accurately account for future and increased costs from flooding. This is contributing to the overvaluation of homes, and any correction or home value deflation would disproportionately impact low-income households.

Lenders have responded to this lack of insurance by selling their risky mortgages, including in coastal areas, to Fannie Mae and Freddie Mac in order to avoid bearing the risk that homeowners will default on their mortgages. This only shifts the risk to the federal government, and by extension, the taxpayer. In the event that the federal government needs to bail out Fannie and Freddie through a string of defaults, taxpayers would ultimately pay the price.

So, this is all about linking insurance, which has gone up mostly because A) people are building in areas that have been in risky areas for a long time but had often been avoided because they were more risky, B) too many buildings, roads, and other construction which makes the areas more risky (such as an inability to move floodwaters away), and C) fearmongering from the climate cultists. What this letter would do would be to cause home mortgages to sky rocket and/or be denied, and for home prices to skyrocket even more than they had due to COVID. I mean, hell, most of D.C. is in a danger prone area, being that a goodly chunk used to be swamp, and could easily flood.

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