Industry groups urge Congress Avoid spending bill deadlock again Concerns over flood risks and operational impediments were cited as reasons ahead of an imminent vote on the issue. (UPDATE: The House passed a stop-gap bill on Nov. 14 to avert a government shutdown. The administration’s new deadline to fund the Departments of Military Construction, Veterans Affairs, Transportation, Housing and Energy is Newly elected House Speaker Mike Johnson, Republican of Louisiana, is scheduled for January 19, 2024. )
Eleven organizations, including the National Association of Community Home Lenders and the Mortgage Bankers Association, warned that 20,000 areas across the country could be at risk from a lack of flood insurance. The National Association of Realtors estimates that 1,300 property sales could be disrupted as part of the budget impasse due to a lack of federal insurance to cover the risk.
“Avoiding shutdowns will prevent disruption to the real estate, homebuilding and mortgage industries that account for more than 20% of the U.S. economy,” said the coalition, which includes the Housing Policy Council, the nation’s leading builders, manufacturers. Housing Institute, National Apartment Association , National Association of Home Builders, National Housing Conference, National Multifamily Housing Council and American Mortgage Insurance Corporation.
If federal flood insurance is unavailable due to closures, some coverage is available In the growing private marketbut more than two-thirds of people who need it may not have access.
Even without a government shutdown — which could disrupt housing programs and coverage checks and raise interest rates — new research shows flood risk is linked to Related reportsbecoming more and more expensive.
Based on experience since 2020, the estimated annual cost of flood risk to federally backed mortgages is $9.4 billion, according to a Congressional Budget Office study released Monday.
Estimates of EAD in 2020 dollars could range from $10.2 billion to $16.1 billion by 2050, based on forecast horizons for disaster risks below expectations and upper limits.
The Congressional Budget Office found that while the National Flood Insurance Program addressed some of the risks, 40 to 50 percent of those risks were in areas on federal maps designated for coverage. Due to departures from historical experience and updates, these maps may not accurately reflect risks. lag.
Flood risk is a concern to some extent for mortgage operations of all types and sizes, and the resulting property damage can harm the value of a servicer’s collateral and loan performance. Obtaining insurance is a potential barrier to new business.
Chartered Mortgage Subsidiaries with Non-Banks and Depository Institutions Still incurring lossesAccording to the latest quarterly data released by MBA, both businesses cannot afford any setbacks and rates have remained high, which means that most of their profits come from services.
Large rate changes that would occur during a government shutdown are unlikely to be beneficial to service or origination, as the volatility could result in costly operating and valuation adjustments.
Rate-indicative bond yields were lower at Tuesday’s deadline due to weaker-than-expected inflation data, but could surge if the government shuts down on Friday when temporary funding is running out.
Melissa Cohn, regional vice president at William Raveis Mortgage, said in emailed comments Tuesday morning that the shutdown “will likely push interest rates higher because the greater the risk, the higher the interest rate.”