Mortgage regulators are ignoring the threat of rising global temperatures, creating what some analysts fear is a ticking time bomb in certain areas. 

As homes in high climate-risk regions lose value because of more powerful storms, regulators have taken little action to address the potential housing crisis, per The New York Times. 

What's happening?

With rising global temperatures, more frequent floods and natural disasters are threatening the livelihood of homes in low-lying coastal areas and dry mountains. 

Four years ago, during the first year of Joe Biden's presidency, financial regulators acknowledged that the changing climate could threaten the financial system. However, since then, little to no action has been taken beyond an increase in mortgage rates that has somewhat slowed homebuying and housing prices. 

Despite growing concerns, experts fear the Federal Housing Finance Agency hasn't done enough to protect Fannie Mae and Freddie Mac, the two government-sponsored agencies that back half of the nation's outstanding mortgages.

Why is climate-related risk important for the housing market?

Climate catastrophes could result in massive losses, slashing Fannie Mae's and Freddie Mac's profits, which in turn would undermine their ability to keep the mortgage market liquid, according to Susan Crawford, a senior fellow at the Carnegie Endowment for International Peace.

"This is all about the safety and soundness of the enterprises," Crawford told the Times. "We've got this mortgage-generating machine that is just moving blindly on without taking into account these risks."

While extreme weather events have always been a part of Earth's history, more powerful and frequent storms are a result of dirty energy. Pollution from nonrenewable energy sources causes the planet to overheat, which supercharges extreme weather. By switching to clean energy and decreasing the total amount of pollution in the atmosphere, policymakers can help safeguard communities from climate-related risks. 

What's being done about a potential climate-related housing crisis?

To safeguard homeowners and the housing market as a whole, changes to the current backing system need to be made. Moving forward, Fannie Mae and Freddie Mac could revise their fees to better account for climate risk or add provisions that would trigger to help a homeowner with a pause in payment due dates if their home were damaged or destroyed. 

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"There are ways, however, to cushion the impact for vulnerable homeowners," the Times wrote. "Fannie and Freddie could scale fees by the borrowers' income, for example, or create subsidies for people who want to relocate to safety."

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