Climate disasters are about to destroy American homes and banks are starting to calculate their risks.
Jesse Cannon, associate professor of real estate at Tulane University, calls this process “underwater writing” or “blue line,” depending on whether you look at it from a bank or a consumer perspective, respectively.
Underwater writing is a neologism that combines “subscription” with “submarine”. It refers to the process that banks take into account external climate data, including business analysis, climate science, disaster modeling and insurance modeling, when granting loans and appraising. of a home’s value, according to Kennan. Their research found that smaller, more local community banks have a better understanding of local flood risks than large banks, which helps them better understand risk and resilient investment strategies.
The blue line, on the other hand, occurs when banks or mortgage lenders draw risk lines around certain neighborhoods and streets based on their vulnerability to flooding or other climate-related disasters. The term is reminiscent of redlining, a product of institutional racism that restricts the availability of credit to homeowners in minority-dominated neighborhoods. Some climate advocates believe the blue line creates a new class of victims whose climate risk is determined by banks with little transparency.
“The direct comparison between redlining and blue-line is that it targets some of the same groups. The people most exposed to climate change and climate disasters are those who fight and fight for their social rights. advocate, ”said Jasmine Sanders, executive director of Our Climate, a group of young climate activists.
“People are facing a double whammy,” she said. “Communities marked in red that are still affected are going to be affected by this blue line now. “
Nevertheless, climate risk is now an integral part of the value of a home. Find out about your risk on websites like the Insurance Information Institute’s freehomerisk.com or the First Street Foundation’s floodfactor.com, and watch videos to learn more about how some homeowners deal with climate risk.