Costliest Named Storms

U.S. Single Family Home Value by Flood Risk




Total Damage

High Risk Flood Zones Requiring Flood Insurance

Katrina Sandy Ike Andrew Wilma Irene Charley Ivan Rita Frances

2005 2012 2008 1992 2005 2011 2004 2004 2005 2004

3 – 2 5 3 1 4 3 3 2

$108.0 billion $71.4 billion $29.5 billion $26.5 billion $20.6 billion $15.6 billion $15 billion $14.2 billion $10.0 billion $8.9 billion

$904,639,800,822 4% $22,379,244,361,018 96% All Other Homes

loans and existing borrowers will be in violation of mortgage requirements and can potentially face foreclosure. The only buyers left will be all-cash purchasers with a love of waterfront property and bargain prices. At this point flood insurance is available and affordable but things can change. The federal flood insurance program is — forgive the expression — deeply underwater. The NFIP owes $24.6 billion to the Treasury, the very reason the 2018 budget proposal talks about ending federal subsidies. By The Numbers In the 37-year period between 1980 and 2017 there were 203 separate weather “events” with damages of at least $1 billion according to the National Centers for Environmental Information. The total cost? More than $1.1 trillion. About a decade ago the flood insurance game changed. Hurricanes Katrina, Rita, and Wilma racked up nearly $140 billion in damages in a single year. In 2012 Superstorm Sandy caused damages worth more than $70 billion.

the mortgage is outstanding. But what if such assumptions are wrong?

• If insurance costs are too high then marginal borrowers will exceed debt- to-income ratios and not be able to get financing. That means the pool of potential borrowers will shrink, demand will decline, and property values will be pushed down. • If premiums rise borrowers must continue coverage, regardless of the increase. To lose coverage means violating the mortgage terms, thereby giving the lender the right to purchase high-cost “force-placed insurance” with reimbursement from the borrower. • Without flood insurance the waterfront lender has the right to foreclose, however that might be an option lenders want to avoid. The reason? The foreclosure process can be expensive, slow, and complex. • If flood insurance is simply unavailable in certain areas then mortgage applicants will be unable to get new

Source: NOAA Through 2013. Amounts not corrected for inflation

Not all the storm losses represent insurance claims because in many cases property owners do not have coverage. Like insurance actuaries, homeowners check the odds as best they can and many elect to go without coverage, a logical choice in areas without a flooding history. That approach generally works, but not always. For instance, in 2016 severe rainstorms hit the Baton Rouge area. This was not a hurricane; instead it was just a storm without a name, but one which according to the Insurance Information Institute resulted in 21,720 paid claims against the NFIP. Such claims were worth $1.738 billion, the fourth largest total for a single weather event. The problem for homeowners — and the problem for insurance companies and mortgage lenders — is that places once assumed to be safe and dry are

ATTOM Data Solutions • P3

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