“There’s a tendency to sort of not think about climate change right now,” Kunreuther said. In an interview with POLITICO, he cited new research this week led by his Wharton colleague, Benjamin Keys, that showed real estate transactions are slowing in Florida locales that are vulnerable to sea-level rise driven by climate change. Kunreuther gave a presentation at the event on why people underestimate and under-prepare for low-probability events, offering as evidence the fact that people are still willing to pay to live near at-risk coastal areas. FHFA still distributed slides from those presentations, along with those on flooding and natural disasters, to participants last week. The officials said the economic summit was closed to the media because the other topic - early results from efforts to address the pandemic-created recession - involved only preliminary research. Two senior FHFA officials also told POLITICO that the agency is seeking to hire an environmental economist to research the effect of natural disasters on the mortgage market. After battling the potential housing crisis brought by the coronavirus pandemic-induced recession, Kunreuther said FHFA Deputy Director of Research and Statistics Lynn Fisher informed him that the regulator will now turn its attention to natural disasters. Last month’s event offered a window into the federal housing institutions’ thinking on the matter, participants told POLITICO. “I don’t know why they have now gotten into it, but I suspect they think they have to because of the mortgage market,” Howard Kunreuther, who gave the keynote speech and is co-director of the Wharton Risk Management and Decision Processes Center, told POLITICO. Experts have said Fannie Mae and Freddie Mac have been circumspect in discussing the potential threats to mortgages on homes from storms, flooding and wildfires that are becoming more damaging because of climate change, a signal that the two companies are wary of spooking the housing market.īut the recent gathering shows the data is beginning to point to connections between housing prices and the changing climate. mortgages, according to documents presented at the event reviewed by POLITICO. The summit, which was closed to media, focused heavily on climate-fueled disruptions to U.S. 29 virtual summit, which took place amid a backdrop of record western wildfires and Atlantic storms. Those threats were the focus on the Sept. Kousky and other experts said interest has been growing among federal housing officials over what rising flood risks mean for their portfolio. She co-wrote the Fannie Mae working paper on post-Harvey mortgage defaults and presented the findings to the two government-sponsored entities and its regulator, the Federal Housing Finance Agency, at a virtual conference last month. “In general there has been increasing concern on increasing flood and storm risk on mortgage markets,” said Carolyn Kousky, executive director of the University of Pennsylvania’s Wharton Risk Management and Decision Processes Center.
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