Comments on FHFA’s RFI on Climate Risk at the Regulated Entities

On April 19, Enterprise submitted comments to the Federal Housing Finance Agency (FHFA) on its Request for Input (RFI) on Climate and Natural Disaster Risk Management at the Regulated Entities. The goal of this RFI is to give interested parties an opportunity to provide input on two broad sets of issues:

1. Identifying and assessing the regulated entities’ current and future climate and natural disaster risk, and
2. Enhancing FHFA’s supervisory and regulatory framework of the entities’ management of risks from extreme weather events.

Climate change poses a major risk to human lives, the stability of the U.S. financial system as well as to our nationwide affordable housing stock. The impacts of climate change put millions of households at risk of uninhabitable conditions, exacerbating the vulnerabilities of lower income households and communities of color. Building resilient and equitable communities that are equipped to withstand and recover from disasters is key. To that end, Enterprise provided a number of recommendations, including how best to adequately evaluate communities’ climate risk given the uncertainties and data limitations, as well as how might the regulated entities support their housing finance missions while minimizing the impact of climate and natural disaster risk. Most importantly, Enterprise urged FHFA to keep equity at the center of all policies and procedures. Since vulnerable populations disproportionately live in areas with the highest climate risk, it is crucial to ensure that the system is not inadvertently recreating punitive policies by making it more difficult for lower income households to obtain affordable housing. Recommendations include policies the regulated entities could pursue to manage climate risk while mitigating adverse effects for low-income and marginalized communities.