Removing Barriers Blog

Letter Filed with FHFA on Climate Change and Natural Disaster Risk
Posted April 19, 2021 by CUNA Advocacy

On Monday, CUNA filed a letter with the FHFA in response to a Request for Information regarding how it should assess and manage climate change and natural disaster risk to Fannie Mae, Freddie Mac, and the Federal Home Loan Banks.

In the letter, CUNA urged the FHFA to not simply rely on repricing and risk transfer mechanisms like insurance or reinsurance, as this will ultimately just price low- and medium-income consumers out of homeownership. The letter also argues that these mechanisms are only a short-term solution because the effects of climate change are unpredictable and far-reaching enough that eventually all geographic areas will be substantially affected. Instead, CUNA advocated for the mitigation of these risks by improving the resiliency of housing stock through improved building codes and retrofitting. CUNA urged the FHFA to use preferential pricing and support programs to ensure that new construction and retrofitted homes can withstand these events, especially for minority, low-, and moderate-income borrowers who are most likely to suffer from the damages of natural disasters. In the context of retrofitting, CUNA also restated its past asks related to PACE financing and the importance of equal access to the secondary market for credit unions of all sizes.