According to research from Colorado State University  (CSU), 2019’s hurricane season may be slightly lower than average due in part to a likely weaker El Niño. With weaker risks of storms, homeowners and servicers can expect lower home damage risk, but climate change-driven natural disasters, including tornadoes and wildfires, still pose a risk to homeowner financial health. Homeowners impacted by natural disasters may fall behind on their mortgage payments and enter delinquency, eventually leading to foreclosure.
According to a report  from the Urban institute, natural disasters leave a negative impact on homeownership long afterward. Urban notes is that the negative effects of disasters persist, or even grow over time, for important financial outcomes. Urban’s report calls for lenders and government sponsored enterprises to update existing mortgage delinquency and foreclosure policies to account for these long-term financial burdens following disasters.
As part of a plan to further address affordable housing issues, and possibly address some of the issues put forth by the Urban Institute, House Financial Services Committee Chairwoman Maxine Waters included a plan for pre-disaster mitigation funds in a bill introduced on Tuesday. Part of the bill contains $5 billion to support mitigation efforts that can protect communities from future disasters and reduce post-disaster federal spending.
The additional funds may act as insurance for homeowners affected by natural disasters. According to CSU’s data, there is a 48% chance of coastal areas being hit by hurricanes making landfall this year, just slightly down from the century-long average of 52%. Homeowners without proper insurance  in these areas are at high risk for default or foreclosure.
According to Frank Nothaft, Chief Economist for CoreLogic, “The disruption of a family’s regular flow of income and payments, as well as substantial loss in property value, can trigger mortgage default; especially if homeowners are underinsured and cannot afford to rebuild.”
CoreLogic’s 2019 Insurance Coverage Adequacy Report  notes how each area at high risk for natural disasters, such as Southern California and wildfires and the Northeastern Atlantic and Gulf Coast regions from Hurricane damage, as well as Tornado Alley, can be impacted by insufficient funding.
The topic of how the industry should prepare for and respond to disasters will be explored thoroughly at the upcoming Five Star Disaster Preparedness Symposium , to be hosted June 5-6, 2019, at the Hotel Monteleone in New Orleans. The Symposium is designed to provide an opportunity for mortgage industry leaders and executives to engage in critical conversations on diligence and preparedness, so the next time natural disaster strikes, the industry will be ready to lend the proper support. You can register for the Disaster Preparedness Symposium here .