Leaders from housing agencies all agreed climate change is a current problem, but came up short on outlining future guidance for lenders and servicers maneuvering weather-related situations.
Heads of the Federal Housing Administration, the Department of Veterans Affairs and the Federal Housing Finance Agency speaking on a panel at the AmeriCatalyst conference Friday, would not address how climate change will impact the relationships between themselves, borrowers and independent mortgage bankers.
The private sector, including lenders, servicers and insurers, might have to start the push for clarity on their own.
Julia Gordon, commissioner at FHA, hinted that servicers may have to act as leaders on this issue as they have done in other situations, such as
"I just want to shout out to the servicers [that did] a lot of heavy lifting for us over the past few years," she said during the panel. "We know it and we're very grateful for it. We're going to keep asking for your partnership."
With some insurers pulling out of
"Is it some other kind of rating system that we come up with, so that people understand what they're getting into? How much does it fall on borrowers versus lenders?," Gordon pondered. "We have to keep having all these conversations, but they can't happen without running into some political walls and toxic third rails and we can't afford that. This is the only planet we have."
John Bell, executive director of VA's loan guarantee program, echoed sentiments that the industry needs to collectively iron out what can be done about homeowners insurance.
"The [main] thing that's facing us and consumers right now is what happens when homeowner insurance companies pull out and homeowners have no other avenues except for force-placed insurance, which we know is not the cheapest insurance in the world," Bell said. "We need to solve that problem together and collectively and more people need to bring solutions. We've been talking about the problems [for years.] Let's start solving the issue."
Despite a lot of unknowns regarding how climate change will impact the dynamics between housing agencies, lenders and borrowers, all government heads outlined that steps are being taken to get the issue on the radar of their respective agencies.
Jessica Shui, supervisory economist at the FHFA, said the agency established a climate change and ESG steering committee which now has 80 people working on it "passionate about climate change." Members of the committee work on climate data collection and research and climate scenario analysis.
"What we constantly have on our mind is how to help vulnerable communities recover from disasters, and also how we help them," she said.
Bell said the VA has developed a climate change model, which "has been extremely helpful for us to understand when climate issues occur."
"When a tornado or worse happens to an area [it helps us understand] what that means and what the financial impacts are that aren't a veteran's fault," Bell said. " What role does the government need to play in this space? Those are the conversations collectively that we need to have because it's not just veterans that are sitting in communities [impacted by climate change.]"
Meanwhile, Gordon said the FHA has started distributing money received from the Inflation Reduction Act to its rental assistance program, which has helped "folks [in FHA's] portfolio and they live in buildings that are often extremely old and have not had a whole lot of investment in them."
"They live in neighborhoods that are susceptible to everything that I've talked about here and we were able to take a big chunk of that $1 billion dollars and allocate it…when you ask how the government can help, the easiest way is to give the government some resources that they can get out into the field," she noted.
Additionally, the FHA Commissioner floated the idea of including single-family in its green mortgage insurance premium program, which gives
"If you build to a certain standard, you get a break on your insurance," Gordon said. "We'd love to do something like that in single-family, which is a bigger issue, but it's something we're talking about."
