President Joe Biden yesterday signed a sweeping executive order on climate change entitled “Executive Order on Climate-Related Financial Risk,” that the White House says “will help the American people better understand how climate change can impact their financial security.”
Of note to the housing community, the executive order will reinstate the 2015 Obama-era Federal Flood Risk Management Standard (FFRMS) which was revoked by the Trump administration. NAHB opposed the 2015 FFRMS because it would dramatically expand regulated floodplain areas without congressional oversight, new floodplain maps, supporting technical data or comprehensive regulatory impact and cost-benefit analyses.
The executive order also requires the secretary of Agriculture, the secretary of Housing and Urban Development, and the secretary of Veterans Affairs to consider approaches to better integrate climate-related financial risk into underwriting standards, loan terms and conditions, and asset management and servicing procedures, as related to their federal lending policies and programs.
These changes could make FHA, VA and USDA-rural development mortgages more expensive and harder to get in places with high risks due to climate change. Additionally, the executive order directs the National Economic Council to assess the risk of climate change on government programs, which could have serious ramifications for the National Flood Insurance Program. Likewise, it tells financial regulators to determine if climate change may threaten financial stability.
NAHB is examining the ramifications of the executive order and will be urging policymakers not to take any regulatory actions that could harm housing affordability.
View a White House fact sheet on the executive order. The full executive order is available here.