![]() They may also be influenced by real estate developers attempting to set the agenda on funding decisions through political donations and other lobbying efforts. Committee members balance the interests of voters. The focus of this project is on understanding the decision process of high-ranking members of Congressional committees. The location, scale, and nature of such mitigation efforts is determined by Congress. Army Corps of Engineers’ (USACE) seawalls, levees, beach nourishment, and other investments. Does the political power of Congressional representatives influence the prioritization and funding of federally-funded flood risk reduction projects?įlood mitigation efforts depend crucially on the U.S. The HMDA and FFIEC data can be combined to generate statistics including: the liquidity of the financial institution (defined as the ratio of cash and securities to total assets), the volume of mortgages held by the financial institution, the amount of recourse on mortgages sold by the institution, and the volume of mortgage backed securities sold by the institution. The research team will use data from the Home Mortgage Disclosure Act (HMDA), the First Street Foundation Flood Model, and data on banks’ branch networks and national balance sheets (collected by the Federal Financial Examination Council (FFIEC)) to examine how much flood risk financial institutions across the country are exposed to and may be able to withstand. In this project, the research team will estimate the aggregate effect of climate risk on the US financial sector’s fragility, designing a Dodd-Frank style climate stress test. Hence climate shocks may propagate through both fire sales and through asset-liability linkages. Increasing climate risk may lead to a rising number of delinquencies and defaults, affecting banks’ net income, but also causing balance sheet write-offs in the value of mortgage backed securities and in the equity value exposed to climate shocks. With about 100 billion dollars of mortgages originated in coastal neighborhoods every year, financial institutions hold a substantial stock of at-risk mortgages with maturities up to 30 years. What is the aggregate effect of climate risk on the stability of the US financial sector? How do banking institutions perform under various climate scenarios? In this analysis, the researchers will use data from the First Street Foundation Flood Model to examine how flood risk more broadly (rather than just “billion-dollar events”) influences lenders’ securitization behavior. In a recent paper, the researchers found that lenders’ sell significantly more mortgages with loan amounts right below the conforming loan limit after a natural disaster that caused more than a billion dollars in damages. Matthew Kahn will use one distinct FHFA rule, the conforming loan limit, to measure the impact of flood risk on securitization volumes. Such agency securitizers follow observable rules set by the Federal Housing Finance Agency (FHFA) for the purchase of securitized mortgages. ![]() In particular, bank lenders may have an incentive to sell their worse flood risk to the two main agency securitizers, Fannie Mae and Freddie Mac. Banks also retain the option to securitize some of these loans. Commercial banks have the ability to screen and price mortgages for flood risk. Hence, households who have purchased a house in coastal areas may be at increasing risk of defaulting on their mortgage. Concurrently, the number and volume of flood insurance policies has been declining since 2008. Recent evidence suggests an increasing risk of natural disasters of the magnitude of Hurricanes Katrina and Sandy. How does changing flood risk influence mortgage lenders’ decisions to hold loans in portfolio or sell them to Fannie Mae and Freddie Mac? Johns Hopkins researchers are using the data to ask the following questions. Researchers interested in using this data should reach out to Mac McComas, with a brief description of their research interests. Learn more about the model and the data available through First Street’s API here. The data include a variety of risk probabilities and flood depths for storm surge, fluvial, and pluvial flooding. The Johns Hopkins University Flood Lab is a partnership between Johns Hopkins 21st Century Cities Initiative (21CC) and the First Street Foundation that enables Hopkins faculty and 21CC affiliated researchers to use new data on the past, present, and future flood risk for every home and property in the US. Johns Hopkins Flood Lab Baltimore’s Inner Harbor flooded in early autumn.
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