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The Effects of Flood Damage on the Subsidy Cost of Federally Backed Mortgages: Working Paper 2024-04

Author

Listed:
  • Evan Herrnstadt
  • Byoung Hark Yoo

Abstract

This paper uses data on mortgages and expected flood damage for each residential property in the United States to examine how much flood damage is expected to increase the cost of federally backed mortgages (referred to as the subsidy cost). The Congressional Budget Office uses its estimate of the subsidy cost to determine the budgetary effects of mortgages guaranteed directly by the federal government and through entities such as Fannie Mae and Freddie Mac. The analysis focuses only on costs to the federal mortgage programs and does not consider any costs borne by

Suggested Citation

  • Evan Herrnstadt & Byoung Hark Yoo, 2024. "The Effects of Flood Damage on the Subsidy Cost of Federally Backed Mortgages: Working Paper 2024-04," Working Papers 60167, Congressional Budget Office.
    • Handle: RePEc:cbo:wpaper:60167
    as

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    File URL: https://www.cbo.gov/system/files/2024-07/60167-Flood-WP.pdf
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    References listed on IDEAS

    as
    1. Peter Ganong & Pascal Noel, 2023. "Why do Borrowers Default on Mortgages?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 138(2), pages 1001-1065.
    2. Meltzer, Rachel & Ellen, Ingrid Gould & Li, Xiaodi, 2021. "Localized commercial effects from natural disasters: The case of Hurricane Sandy and New York City," Regional Science and Urban Economics, Elsevier, vol. 86(C).
    3. Carolyn Kousky & Mark Palim & Ying Pan, 2020. "Flood Damage and Mortgage Credit Risk: A Case Study of Hurricane Harvey," Journal of Housing Research, Taylor & Francis Journals, vol. 29(S1), pages 86-120, December.
    4. Billings, Stephen B. & Gallagher, Emily A. & Ricketts, Lowell, 2022. "Let the rich be flooded: The distribution of financial aid and distress after hurricane harvey," Journal of Financial Economics, Elsevier, vol. 146(2), pages 797-819.
    5. Bradt, Jacob T. & Kousky, Carolyn & Wing, Oliver E.J., 2021. "Voluntary purchases and adverse selection in the market for flood insurance," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).
    6. Andreas Fuster & Paul S. Willen, 2017. "Payment Size, Negative Equity, and Mortgage Default," American Economic Journal: Economic Policy, American Economic Association, vol. 9(4), pages 167-191, November.
    7. Ortega, Francesc & Taṣpınar, Süleyman, 2018. "Rising sea levels and sinking property values: Hurricane Sandy and New York’s housing market," Journal of Urban Economics, Elsevier, vol. 106(C), pages 81-100.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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