Authors: Kristian S. Blickle, Evan Perry, and João A.C. Santos
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Staff Reports
Do Mortgage Lenders Respond to Flood Risk?
Number 1101
May 2024
May 2024
JEL classification: G20, G23, Q54
Using unique nationwide property-level mortgage, flood risk, and flood map data, we analyze whether lenders respond to flood risk that is not captured in FEMA flood maps. We find that lenders are less willing to originate mortgages and charge higher rates for lower LTV loans that face “un-mapped” flood risk. This effect is weaker for high income applicants, as well as non-banks and small local banks. However, we find evidence that non-banks and local banks are more likely to securitize/sell mortgages to borrowers prone to flood risk. Taken together, our results are indicative that mortgage lenders are aware of flood risk outside FEMA’s identified flood zones.
Author Disclosure Statement(s)
Kristian S. Blickle
The author declares that they have no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Evan Perry
The author declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
João A. C. Santos
With regards to the paper “Do Mortgage Lenders Respond to Flood Risk?”, the author João Santos declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
The author declares that they have no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Evan Perry
The author declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
João A. C. Santos
With regards to the paper “Do Mortgage Lenders Respond to Flood Risk?”, the author João Santos declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Suggested Citation:
Blickle, Kristian S., Evan Perry, and João A. C. Santos. 2024. “Do Mortgage Lenders Respond to Flood Risk?” Federal Reserve Bank of New York Staff Reports, no. 1101, April. https://doi.org/10.59576/sr.1101
Blickle, Kristian S., Evan Perry, and João A. C. Santos. 2024. “Do Mortgage Lenders Respond to Flood Risk?” Federal Reserve Bank of New York Staff Reports, no. 1101, April. https://doi.org/10.59576/sr.1101
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