How Climate Change Could Cause Foreclosure Rate to Spike Nearly 400%
Industry Update
July 31, 2025
Source: Yahoo! Finance
Climate change could be responsible for a 380% increase in foreclosures by 2035, according to research firm First Street’s most recent National Risk Assessment.
The assessment also predicts the economic impact of these foreclosures on lenders, and the potential losses could be staggering. First Street’s analysis expects mortgage lenders to lose $1.2 billion in natural disaster-related foreclosures in 2025. That figure is expected to go as high as $5.4 billion by 2035. Losses that big could change how mortgage lenders calculate risk.
Currently, most mortgage lenders consider the borrower’s income, credit history, and debt load as the biggest potential risks in processing loan applications. First Street believes lenders may be forced to consider how extreme weather events could elevate their risk level when making underwriting decisions. Most banks don’t consider the possibility of climate-change-driven foreclosure risk in making loan decisions. First Street assessment suggests they should.
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