Till All Are One... With Higher Mortgage Rates? Climate Change Impacts Your Credit!

A Changing Landscape: More Than Meets the Eye!

Greetings Earthlings! Optimus Prime here reporting on a matter that might hit closer to home than Megatron’s latest scheme. Turns out those pesky humans are now factoring climate change into… *checks notes* …mortgages? Yes you heard right. Lenders are diving deep into your finances and now they're checking if your home is about to become an oceanfront property thanks to rising sea levels. As I always say “Freedom is the right of all sentient beings,” but apparently so is a decent credit score...even if your house is about to become a submarine.

Disasters Decepticons and Delinquencies: A Triple Threat!

This First Street report suggests that climate disasters are increasing faster than my ability to deliver a motivational speech. Insurers are fleeing faster than Starscream at the first sign of trouble and FEMA seems to be doing the Macarena. Apparently in a severe weather year projected annualized climate driven foreclosures could result in $1.21 billion in bank losses this year or 6.7% of all foreclosure credit losses. The result? Your credit score could plummet faster than Bumblebee trying to parallel park. And trust me that's saying something.

Ten Years? More Like Ten Megacycles!

Fast forward a decade and the report says those losses could skyrocket to $5.36 billion representing nearly 30% of foreclosure losses. Thirty percent! That's a bigger risk than trusting Megatron with a handshake. It seems lenders are finally realizing that a flooded basement is less appealing than a Decepticon rally although I suppose one could argue about the level of damage caused by each.

California Florida and Louisiana: The Unholy Trinity of Climate Risk

The study points the finger at California Florida and Louisiana as the main culprits. “Mortgage markets are now on the front lines of climate risk,” says Jeremy Porter from First Street. Front lines? More like a Cybertronian battlefield but with paperwork instead of plasma cannons. As I often say “One shall stand one shall fall.” In this case it seems like some properties are standing while others are falling… directly into the ocean. If you live there you may be forced to walk into the sunset... straight to the bank.

Floodgates Open Wallets Close

Apparently a flooded property leads to a 40% surge in post flood foreclosures. That's worse than finding out your energon supply is tainted. Homeowners are walking away leaving lenders holding the bag which is probably filled with seawater at this point. Some lenders require flood insurance on homes that are in government designated flood plains but overall lenders do not factor the effects of future climate change into their underwriting models. One may say Fannie Mae needs to roll out...a climate aware policy.

The Price of Paradise: A Stark Reality

The cost of climate related disasters has jumped 1,580% in the last four decades. That’s a bigger jump than Optimus Prime after a fresh oil bath! Americans love the coasts but these increasing costs are affecting everyone from households to financial institutions. So remember knowledge is half the battle and the other half is figuring out how to afford flood insurance. As for me I’m sticking to Cybertron… at least until the space weather gets too rough.