Reps. Cleaver, Casten Lead Call for Transparency on Climate Risks to Federal Mortgage Programs

(Washington, D.C.) – This week, U.S. Representatives Emanuel Cleaver, II (D-MO), Ranking Member of the Financial Services Subcommittee on Housing and Insurance, and Sean Casten (D-IL) led 14 House Democrats to call on Congress to direct the Department of Housing and Urban Development (HUD) to conduct a study of climate-related risks to its loan guarantee programs. In a letter to Appropriations Subcommittee on Transportation, Housing, and Urban Development Chairman Steve Womack (R-AR) and Ranking Member Jim Clyburn (D-SC), the lawmakers argued a study was necessary to understand the full impact of climate disasters on the federal housing finance ecosystem and loan performance.

“The Federal Housing Administration’s (FHA) mortgage financing programs enable billions of dollars of capital to support the purchase, refinance, construction, and rehabilitation of single- and multi-family housing and assisted housing across the United States,” the lawmakers wrote. “However, due to the increasing frequency and severity of weather disasters caused by climate change, homeowners may find it challenging to make mortgage payments, which could lead to defaulting on FHA-insured loans.”

“Given the FHA’s prominent role in the mortgage market, we respectfully request that the Subcommittee include the following report language,” the lawmakers continued. “This effort is crucial to understanding the impact of climate disaster broadly on the housing finance ecosystem and loan performance, specifically delinquency and default.”

In 2024, 27 climate disaster events in the U.S. resulted in nearly $185 billion in total damages. If homeowners cannot bear the costs of climate disasters and are unable to make payments on mortgages or other loans, these resulting defaults could push losses into different parts of the financial system, which could shift the risk to lenders – or, in the case of FHA-insured mortgages, to the federal government and American taxpayers – triggering shocks to the broader financial system. 

Given these risks, the lawmakers are calling for a study and report on the impacts of climate change on the performance of loans insured under the Federal Housing Administration’s Mutual Mortgage Insurance (MMI) and General Insurance and Special Risk Insurance (GI/SRI) Funds, including the potential for reduced recoveries and higher loss severities on defaulted loans due to the impacts of climate change. Additionally, the lawmakers would like HUD to identify regions of the country where FHA-insured mortgages are most exposed to climate-related risks.

The letter was co-signed by Representatives Cleo Fields (D-LA), Nikema Williams (D-GA), Juan Vargas (D-CA), Yvette Clarke (D-NY), André Carson (D-IN), George Whitesides (D-CA), Sylvia Garcia (D-TX), Steven Horsford (D-NV), Gregory Meeks (D-NY), Sam Liccardo (D-CA), Dave Min (D-CA), Joyce Beatty (D-OH), Mark DeSaulnier (D-CA), and Yassamin Ansari (D-AZ).

The official letter from lawmakers is available here.

Emanuel Cleaver, II is the U.S. Representative for Missouri's Fifth Congressional District, which includes Kansas City, Independence, Lee's Summit, Raytown, Grandview, Sugar Creek, Greenwood, Blue Springs, North Kansas City, Gladstone, and Claycomo. He is a member of the exclusive House Financial Services Committee and Ranking Member of the House Subcommittee on Housing and Insurance.