Could Climate Change Drive a Foreclosure Crisis? | Topouzis & Associates, P.C.


April 30, 2019

Could Climate Change Drive a Foreclosure Crisis?

Could Climate Change Drive a Foreclosure Crisis?

When it comes to foreclosure numbers, there’s little question that in an ordinary market the greatest risk arises in the fallout from natural disasters. Hurricanes, particularly, have shown a great deal of capacity to wreak havoc on a housing market—and, as the frequency and severity of these gigantic storms appear to be incontrovertibly on the rise, it is coastal markets that may bear the brunt of the risk. Even coastal areas that once were not considered to be likely landfall-zones for hurricanes—and where, therefore, risk assessment was done with a less rigorous zeal than in areas accustomed to them—are increasingly at risk for the newly unpredictable paths taken by storm systems due to the apparent effects of climate change.

Foreclosures in the wake of Hurricane Irma in our service area of South Florida, for example, increased by nearly 70 percent year-over-year, which some found stunning when compared to the nationwide average of merely 1 percent. And South Florida is generally accustomed to some risk of hurricane damage.

Those assessing the damage done to Texas by Hurricane Harvey—which eventually tied Hurricane Katrina in terms of costliness—found that a significant portion of the $125 billion in areas declared federal disaster areas were linked to the 80 percent of affected homes that had gone without flood insurance. Mortgage delinquencies on damaged homes leaped to exceed 200 percent.

If mortgage servicers and insurance companies do not prepare for these storms to continue in their trends toward greater frequency and severity, then foreclosure crises could very well arise as these coastal market zones become the areas at the epicenter of default. The amount of real estate in coastal zones, after all, exceeds the trillion dollar-risk mark. These future risks need to be taken very seriously, by loan originators and homeowners alike.

Meanwhile, issues that arise in the wake of a home’s going through a natural disaster can cause issues with title, which can cause latent issues to emerge even after one has purchased a home.

Security in home buying is something that can only be assured by a solid title search and a policy of title insurance to match it. Topouzis & Associates, P.C. is here to act as a bulwark against title problems initiated in the past. We do title searches and ensure a buyer is gaining clear title to their new property—and we back our services with offerings of title insurance (click here), in case someone along the line of ownership—or some storm—did something that will weaken title at some point in the future.