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HUD Changing Financing Underwriting Process to Include Climate Change Issues

Millions of Americans rely on federal mortgage financing and insurance programs when purchasing, building, rehabbing, and refinancing homes and other real estate projects. Earlier this month, HUD - the U.S. Department of Housing and Urban Development, released a detailed press release about changes that are coming to its underwriting process. The changes are meant to address issues related to “climate resilience” and climate change.

The emphasis on climate resilience is in reaction to many instances of widespread damage and destruction caused by natural disasters, including the recent Hurricane Ida and its impact on Louisiana. HUD, in addition to more than 20 other federal agencies, is looking for ways to incentivize measures that take climate change issues into account. The primary action that will take place include considering the financial risk involved as it relates to climate directly into their underwriting process for mortgage financing and insurance issuance. This could considerably change policies and rates in certain areas that are more prone to climate-change related natural disasters such as wildfires, flooding, and catastrophic storms. In addition, and to off-set this, HUD will offer incentives like tax credits and grants to construction and building companies in relation to meeting standards for energy-efficiency, sustainability, and the building of resilient structures that can withstand damage from climate-related disasters. The department will also offer grant money to companies who participate in rebuilding cities after natural disasters. HUD will be working in collaboration with the U.S. Department of Agriculture and the U.S. Department of Veterans Affairs in implementing these changes.

Also part of the new climate-related plan is a change in how grant money is disbursed to states following natural disasters as part of the rebuilding effort. A major focus will be on ensuring money gets to diverse areas to increase building efficiency and resiliency in areas where infrastructure is less to survive natural disasters, including wetlands and floodplains.

These changes are currently being worked on by HUD. It is estimated that buyers using federally backed financing could begin to be affected by these new policies as soon as 18 months from now.

Florida Keys real estate is a prime location to be affected by the climate-change efforts of HUD, as hurricane season and flooding are serious concerns in the area. Now is a great time to purchase a waterfront home for sale in the Fl Keys, before these new changes go into effect.


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