Climate Risk, Part 3: The Underwater Mortgage Market

This week, we present the final episode in our 3-part interview
series on climate risk. We’re going deep on the housing
market. 

Our guest co-authored an important study quantifying extreme
weather risk in the U.S. housing market — and identifying how
banks are shifting that risk to us, the taxpayers.

Shayle Kann talks with Amine Ouazad, a
professor of applied economics at the graduate business school HEC
Montreal. He recently co-authored a study called Mortgage
Financing in the Face of Rising Climate Risk
.

The New York Times summarized
the research
, asking if we are facing similar problems that
caused the housing crisis.

Topics covered on this episode:

  • The role of Fannie Mae and Freddie Mac in the mortgage market:
    what happens when mortgage loans get securitized to them?
  • Why does the decline in poor FEMA mapping and flood insurance
    create additional risk for lenders?
  • How are risky mortgage loans in vulnerable areas getting sold
    to Fannie and Freddie — putting taxpayers on the hook for tens of
    billions of dollars in risk?
  • What happens after a large disaster in terms of new loans? What
    is the significance?
  • What might this mean for the health of the housing market as
    natural disasters continue to increase in frequency and magnitude?
    Will there be a cascading effect?
  • What parallels can we draw from the 2008 financial crisis that
    resulted from the housing market collapse?

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Support for the Interchange comes from Schneider Electric, the
leader of the digital transformation in energy management and
automation. 

Support for this podcast comes from PG&E. PG&E is
helping to electrify corporate fleet vehicles. Get in touch with
PG&E’s EV specialists to find
out how
you can take your transportation fleet electric.

Source: FS – Transport 2
Climate Risk, Part 3: The Underwater Mortgage Market



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