On January 13, 2025, the CFPB issued a new report that found significant differences in the likelihood that homeowners with a mortgage are adequately insured against flooding based both on location and on income and assets. The report looks at flood risk in the southeast and central southwest census regions of the United States, as measured by flood risk data from both the Federal Emergency Management Agency (FEMA) and the First Street Foundation.
The report’s key findings include:
Current flood insurance maps may not capture accurate flood risk exposure. FEMA flood insurance maps rate flood risk highest in coastal areas, while First Street’s estimates predict significantly more exposure in inland areas as well as broader exposure in coastal regions.
Over 400,000 homes may be underinsured for flooding events in the southeast and central southwestern parts of the country alone. Most flood insurance is offered through the National Flood Insurance Program, which receives federal subsidies and relies on FEMA flood insurance maps to determine which properties qualify for coverage. Consequently, homeowners with a mortgage may find themselves inadequately insured against flooding if the FEMA flood insurance maps fail to accurately assess future flood risk.
Homeowners who may be underinsured for flood risk also are least likely to be able to self-insure and recover from flooding. Borrowers living in flood-prone inland areas, as shown by the First Street flood risk model, tend to have lower incomes and make smaller down payments on their homes compared to those who live outside these areas. This includes both homeowners in coastal flood risk areas and those in areas not considered high risk by FEMA or First Street. This indicates that these borrowers have fewer financial resources to recover from flooding and are at greater risk of suffering severe losses after a flood.
The CFPB’s press release can be found here.
Read the full report here.