Damage in Kentucky’s Sunshine Hills subdivision after tornado Saturday, May 17, 2025
Photo and Reporting Credit: Michael Clevenger, Courier Journal Via USA TODAY Network
By Sharon Franklin.
Amnesty International issued a report in April 2025 which addressed economic and climate injustice and the inter-connectiveness of the growing impact of severe weather events. Additionally, according to another report by First Street. Climate, the Sixth “C” of Credit , it is expected to increase home foreclosures. The report was released following the latest tornadoes that swept through Missouri and Kentucky, leaving at least 25 people dead and scores injured. Uninsured damage from flooding, as well as the depreciation of home values and rising insurance premiums from increasingly destructive climate disasters is still being calculated. These climate events could lead to as much as $1.2 billion in credit losses in 2025, and estimates that mortgages on about 19,000 properties could be repossessed or foreclosed due to climate risk.
Key Points of the Climate, the Sixth “C” of Credit Report:
- Climate Driven Credit Losses Could Cost Banks Billions.
- Insurance Industry Bearing and Shifting Burden.
- Flood Risk Highlights Systemic Fragility.
- Household Absorbing Increased Climate Risk.
- Floods Are the Leading Driver of Foreclosure Among Perils.
- Wind and Wildfire Damages are Insured, but Rising Premiums Drive Indirect Foreclosure Risk.
- Macroeconomic Conditions Compound Climate Pressures.
- Historical Climate Impacts Have Resulted in Hidden Credit Losses.
- Escalating Flood Risks and Climate Drive Macroeconomic Changes Drive Future Foreclosures.
As many of Americans already know the insurance industry is gradually shifting the costs of climate disasters onto homeowners, causing the financial stability of borrowers and the performance of their mortgages to be increasingly at risk. In the most severe cases, this escalating burden can ultimately lead to foreclosure.
Photo Credit: Getty Images/Leandro Lozada
Why It Matters? Studies have concluded that global warming and extreme natural disasters has immediate consequences on housing when it comes to home insurance and rebuilding destroyed properties.
What To Know If 2025 turn out to be a particularly natural disaster year. Lenders could lose up to $1.2 billion this year. It is estimated that Florida, Louisiana, and California alone are projected to account for 53 percent of all climate-related mortgage losses in 2025. The main culprit would likely be flooding, and according to the report, foreclosures spike 40 percent among damaged homes following flood events. Dr. Jeremy Porter, Head of Climate Implications Research, First Street Foundation stated “Flooding leads to higher foreclosure rates because many properties are uninsured, especially those outside FEMA’s [the Federal Emergency Management Agency’s] Special Flood Hazard Areas”.
Resources for Blog:
- The 12th National Risk Assessment Property Prices in Peril
https://assets.riskfactor.com/media/The%2012th%20National%20Risk%20Assessment.pdf - Disasters Will Escalate Foreclosures and Create Systemic Financial Risk in Mortgage Markets, Study Climate, the Sixth “C” of Credit
https://firststreet.org/research-library/climate-the-sixth-c-of-credit and https://www.realtor.com/news/trends/climate-risk-foreclosures-report-first-street/ - Economic and Climate Injustice in Amnesty International’s 2025 Annual Report
https://unipd-centrodirittiumani.it/en/news/economic-and-climate-injustice-in-amnesty-internationals-2025-annual-report - US Housing Market Warned of Mortgage Rate Hikes, Foreclosures
https://www.newsweek.com/us-housing-market-warned-mortgage-rate-hikes-foreclosures-2074671 - Climate Disasters Are Raising The Risk Of US Home Repossessions, Warns Research Group
https://www.ft.com/content/c1d1ee7f-f34a-490d-bbd6-95b895ffd33e - Tornadoes, storms kill more than 30: See photos from Kentucky, Missouri, other states https://www.usatoday.com/story/news/nation/2025/05/17/tornadoes-st-louis-kentucky-indiana/83691932007/