The Consumer Financial Protection Bureau (CFPB) issued a new report that found homeowners who face flooding from rivers and creeks were more likely to be underinsured than residents of coastal areas.
The report, which used a sample of mortgage applications from 2018-2022, determined the flood risk exposure of the mortgage market was more extensive and more geographically dispersed than previously understood. According to the CFPB, more than 400,000 homes may be underinsured for flooding events in the southeast and central southwestern parts of the country alone.
Furthermore, while the CFPB observed the majority of flood insurance is provided through the federally subsidized National Flood Insurance Program, the new report found borrowers in inland areas at risk of flooding had lower incomes and put less money down to purchase their homes compared to homeowners not in inland flood areas. This suggested these borrowers had the fewest financial resources to recover from flooding and are most at risk of suffering catastrophic loss after a flood.
