On January 13, the CFPB released a report titled “Flood Risk and the U.S. Mortgage Market” discussing differences in homeowners’ access to flood insurance based on location, income and assets. The report is based on a sample of mortgage applications data from 2018 to 2022, and examines flood risk in the southeast and central southwest census regions of the US, according to data from the Federal Emergency Management Agency (FEMA) and the First Street Foundation. The Bureau found that homeowners in coastal areas of those regions were most likely to have flood insurance and generally had higher incomes and assets, making them better able to recover from floods. By contrast, homeowners living near inland streams and rivers were less likely to have flood insurance and had fewer resources to recover from floods. In total, the CFPB believes that over 400,000 mortgaged homes may be underinsured for flooding events in these two regions alone. According to the Bureau, this is due to the National Flood Insurance Program being based off of FEMA’s flood insurance maps, which the CFPB notes may not fully capture flood risks in inland areas, leaving many homes underinsured. The findings underscore the need for improved flood risk identification and insurance coverage to enhance the resilience of flood-prone communities, protect homeowners from the financial impacts of flooding, and inform policymakers’ efforts to address these challenges.
