Playing the Long Game Against Flood Risk

Playing the Long Game Against Flood Risk

October 18, 2021 Off By administrator

Federal regulators must strengthen flood risk disclosure and create policies to confront climate change.

In the United States, 14.6 million homes are at risk of flooding—how confident are you that your home is not one of them?

You might not know because only half of states require sellers to disclose the risk of flooding to homebuyers, even though the Federal Emergency Management Agency (FEMA) reports that flooding is the most common natural disaster in the country. Because of climate change, it will only become even more common.

Homeowners must know their properties are at risk, but state and federal governments should also craft policies to protect at-risk homeowners from both physical danger and financial ruin.

Without both better disclosure and financial support for potential buyers, homeowners take on huge risks. Flooding will cost U.S. homeowners as much as $20 billion this year—four times what flood damage cost homeowners in the 1980s, as adjusted for inflation. Florida homeowners alone are anticipated to spend $8 billion each year fixing the damage wrought by flooding, and experts expect those costs to rise due to the effects of climate change.

In addition to incurring financial costs, flooding events can harm an occupant’s mental well-being. Researchers in the United Kingdom studying flood victims found that many of them suffered from post-traumatic stress disorder (PTSD), anxiety, and depression, especially if they had been forced to vacate their homes, had already experienced a flooding event, or were in poor health when the flooding occurred.

Considering these harms, agencies can implement regulations that would make the housing process less opaque for buyers.

Advocacy groups and scholars increasingly call on federal regulators to close the risk information gap for consumers looking to buy property by creating stronger rules for flood risk disclosure.

The Natural Resources Defense Council (NRDC) recommends steps that the federal government could take to improve risk disclosure to homeowners. FEMA could guarantee homeowners a “right to know” about a property’s history of flooding and flood insurance coverage. FEMA could also prompt changes in state regulations by requiring states to adopt flood hazard disclosure requirements as a precondition of participation in the National Flood Insurance Program (NFIP)—a program managed by FEMA that provides affordable flood insurance to property owners.

Recently, though, the federal government’s role in flood risk disclosure has come under scrutiny. Investigative journalists have found that the U.S. Department of Housing and Urban Development (HUD)—which sells homes foreclosed upon because of the previous owner’s inability to pay a federally insured mortgage—disproportionately sells property located in flood-prone areas compared to all homes sold in the United States.

During such sales, HUD does not disclose flood risk to homebuyers until buyers have already made an offer on a…

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