Latest news with #foreclosures
CBS News
19-05-2025
- Business
- CBS News
Climate change could drive surge in foreclosures and lender losses, new study finds
Extreme weather linked to climate change could spell financial ruin for many American homeowners and lead to billions in losses for lenders, a new study finds. First Street, a research firm that studies the impact of climate change, projects in an analysis released Monday that foreclosures across the U.S. caused by flooding, wind and other weather-related incidents could soar 380% over the next 10 years. By 2035, climate-driven events could account for up to 30% of all foreclosures by 2035, up from roughly 7% this year. Low- to moderate-income households are particularly vulnerable to the effect of severe weather on their homes, First Street noted. Much of Americans' wealth is tied up in the value of their properties. A cascade of foreclosures, driven by the mounting costs of repairs and rising insurance premiums stemming from extreme weather, wouldn't only hurt homeowners. First Street estimates lenders will lose $1.2 billion a year in 2025 — and up to $5.4 billion in 10 years — as they are forced to absorb the cost of mortgage defaults. Such losses represent the "hidden risks" of climate change that lenders often fail to account for in their underwriting practices, Jeremy Porter, head of climate implications at First Street, told CBS MoneyWatch. Lenders consider factors including a borrower's income, debt and credit score in issuing mortgages, but not the potential impact of extreme weather on a property or how it could raise premiums. First Street also looked at how indirect factors, like rising insurance premiums, are already shaping foreclosure trends. For every 1% increase in insurance costs, the firm projects a roughly 1% increase in the foreclosure rate nationwide. The findings comes as insurers are jacking up the cost of homeowners policies and in some cases exiting markets around the U.S. altogether, leading to spottier coverage in disaster-prone areas like California. That could leave more individual homeowners on the hook for damage from extreme weather. First Street said integrating climate risk into loan assessments could help lenders – and homeowners – be better prepared for weather-related disasters. But it could also tighten lending conditions, Porter said, putting potential homebuyers at a disadvantage. "It's going to increase the price of homes. It's going to increase interest rates," he said. Where climate foreclosures could rise According to First Street, the communities around the U.S. at greatest risk for climate-related foreclosures in the years to come are densely populated areas with high property values and large numbers of underinsured homeowners. That includes coastal areas vulnerable to storm surge and hurricane winds. For example, Florida's Duval County in the northeastern corner of the state, home to the city of Jacksonville, could see up to $60 million in credit losses resulting from 900 foreclosures in a "severe weather" year, according to CBS MoneyWatch's analysis of First Street's data Florida is home to 8 of the top 10 counties with the highest projected credit losses due to extreme weather, the data shows. Louisiana, California and swaths of the northeast are also projected to see high climate-related mortgage losses this year. But the impact won't just be felt in coastal areas: First Street also expects extreme rainfall and riverine flooding to drive up foreclosures in inland states. "We do expect foreclosures to rise in those areas because the predominant driver is a lack of insurance," Porter said. According to First Street, flooding events in particular is likely to drive up foreclosure rates, as gaps in insurance coverage put more people at risk of defaulting on their mortgages. Unlike homeowners insurance, flood insurance is only required for people who have federally-backed mortgages in FEMA's Special Flood Hazard Areas. As of August 2023, that amounted to roughly 3.1 million policies, according to National Flood Insurance Program data. But far more people could be at risk. FEMA's 100-year flood zone maps include just under 8 million properties. But First Street estimates that nearly 18 million homes are at risk of flooding. That's because while the agency takes flooding from major river channels and coastal storm surge into account for its maps, it does not consider extreme precipitation, Porter said. "We already know that about half the people with significant flood risk aren't mapped into [FEMA's] Special Flood Hazard Area," he said. "So it leads to a state where we have a lot of underinsurance across the country, in particular from flooding." Meanwhile, whether or not you live in an official FEMA flood zone can make a difference when it comes to the likelihood of foreclosure, First Street found. That's because people outside flood zones often lack insurance. "If you don't protect yourselves, then when the event does occur it's completely on you. You end up having to pay out of pocket and you may go into foreclosure," Porter said. In an analysis of 29 historical flood events from 2002-2019, First Street found that damaged properties outside of those FEMA-designated zones experienced foreclosure increases at an average of 52% higher than properties inside the zones. FEMA did not respond to a request for comment on if and how it plans to update its flood maps. According to one estimate by the Association of State Floodplain Managers, it could take up to $11.8 billion to complete updated flood mapping in the U.S. Mary Cunningham Mary Cunningham is a reporter for CBS MoneyWatch. Before joining the business and finance vertical, she worked at "60 Minutes," and CBS News 24/7 as part of the CBS News Associate Program. contributed to this report.
Fast Company
17-05-2025
- Business
- Fast Company
Housing market shift: Foreclosures are creeping back up again
Want more housing market stories from Lance Lambert's ResiClub in your inbox? Subscribe to the ResiClub newsletter. This week, the Federal Reserve Bank of New York published its quarterly Household Debt and Credit Report. It shows that while still low, distress is creeping back into the housing market. Here's how the U.S. housing foreclosures in Q1 of 2025 compare to previous years: Q1 2014: 144,500 Q1 2015: 111,820 Q1 2016: 96,680 Q1 2017: 90,460 Q1 2018: 76,360 Q1 2019: 71,040 Q1 2020: 74,720 Q1 2021: 11,400 Q1 2022: 24,220 Q1 2023: 35,640 Q1 2024: 44,180 Q1 2025: 61,660 When COVID-19 lockdowns began, the federal government implemented a nationwide foreclosure moratorium to protect homeowners from the economic fallout. These protections—including forbearance programs—were extended multiple times. At the same time, a historic surge in housing demand pushed home prices to new highs during the pandemic housing boom, boosting homeowner equity and keeping foreclosure activity unusually low. But in recent quarters, foreclosures have steadily returned, inching closer to pre-pandemic 2019 levels. That foreclosure rebound picked up pace in Q1 2025, following the expiration of the moratorium on foreclosures of home loans backed by the U.S. Department of Veterans Affairs. The question heading forward: Will housing foreclosures continue to rise through the rest of 2025 and in 2026? Let's take a closer look at the leading indicators. Before U.S. housing foreclosures rise, delinquencies of 90-plus days typically increase. While credit card and auto delinquencies of 90 days or more have surged in recent quarters, delinquencies of 90-plus days on household mortgages remain well below pre-pandemic 2019 levels. Here's how the recent share of household mortgage balances that are 90-plus days delinquent compares to previous years: Q1 2014: 3.72% Q1 2015: 2.95% Q1 2016: 2.08% Q1 2017: 1.67% Q1 2018: 1.22% Q1 2019: 1.00% Q1 2020: 1.06% Q1 2021: 0.59% Q1 2022: 0.47% Q1 2023: 0.44% Q1 2024: 0.60% Q1 2025: 0.86% On the delinquency front, the most noticeable development this quarter is that student loan delinquencies surged to a five-year high in early 2025. While the jump was expected after years of artificially low student loan delinquency rates, Fed researchers warned of serious consequences for behind student-loan borrowers, including damaged credit and reduced access to mortgages and auto loans. According to the New York Fed, superprime U.S. borrowers—those with credit scores above 760—who carry unpaid student loan balances are expected to see their credit scores drop by an average of 171 points this spring. That's because student loan delinquencies, which hadn't been reported to credit bureaus since the start of the pandemic, are now being reported again. This sudden credit hit could temporarily push some borrowers out of the housing market in 2025 and 2026. The Treasury has also resumed collection tactics on student loans, including wage garnishment and tax refund seizures, raising questions about potential spillover into other areas of consumer credit. And before 90-plus day delinquencies typically increase, 30-plus day delinquencies usually rise first. Indeed, 30-plus day mortgage delinquencies have returned to pre-pandemic 2019 levels. Here's how the portion of household mortgages transitioning into 30-plus days delinquent compares to historic data. Q1 2014: 4.92% Q1 2015: 4.05% Q1 2016: 3.70% Q1 2017: 3.51% Q1 2018: 3.38% Q1 2019: 3.50% Q1 2020: 3.48% Q1 2021: 1.59% Q1 2022: 1.66% Q1 2023: 2.43% Q1 2024: 3.24% Q1 2025: 3.71% Big picture: While U.S. housing foreclosures remain low and below pre-pandemic 2019 levels, the 30-plus days delinquency data suggests that foreclosures could gradually near pre-pandemic 2019 by the end of 2025.
