(Credit: Terrance Emerson/stock.adobe.com)
Climate disasters could lead to $5.4 billion in foreclosures by 2035, up sharply from $1.2 billion this year, driven by an escalating insurance crisis and the increasing frequency and severity of events, including flooding.
This is according to First Street’s 13th National Risk Assessment, which analyzes the relationship between physical climate risk and mortgage defaults. Costs related to climate-related events have surged 1,580% over the past 40 years, fundamentally altering risk assessment for households, financial institutions and investment portfolios by eroding income and driving losses, the firm said. Extreme weather damage has consistently been the costliest category of homeowners insurance claims, and mortgage lenders have depended on this safety net as a first line of defense against loan losses. As such, insurance has been required as a condition of mortgage approval.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
