FOR IMMEDIATE RELEASE: March 27, 2025
CONTACT: Carter Dougherty, carter@ourfinancialsecurity.org
Housing Agency’s Disregard for Growing Climate Risk Will Only Deepen the Housing Affordability Crisis
WASHINGTON, D.C. – Tuesday afternoon, Federal Housing Finance Agency (FHFA) Director Bill Pulte sent out a flurry of orders via tweets containing photographs of documents, including rescission of its Advisory Bulletin on Climate-Related Risk Management (Climate Risk AB) and waiver of Equitable Housing Finance Plan (EHFP) requirements for Fannie Mae and Freddie Mac (the Enterprises). The FHFA’s abandonment of policies to address emerging risks and protect homeowners will have far-reaching negative impacts on housing affordability and ultimately the stability of the housing finance sector. It will especially impact lower-income communities and communities of color, who disproportionately bear the economic burdens of climate impacts on housing.
“The increasing frequency and severity of climate change-driven disasters compounded by the climate-driven insurance crisis pose significant financial risks to homeowners, the stability of nation’s housing and mortgage markets, and the safety and soundness of Fannie and Freddie,” said Kelsey Condon, policy counsel for climate finance at Americans for Financial Reform Education Fund. “Unaddressed, climate risk jeopardizes the nation’s affordable housing supply, particularly for those most susceptible to and least able to recover from natural disasters.”
The Climate Risk AB, issued in May 2024, provided high-level guidance for the Enterprises on integrating climate-related risk into their existing risk management frameworks, including how climate risk could be addressed through traditional risk categories. While the rescission order acknowledges the existence of climate risk to the housing market, it claims that climate does not deserve specific supervisory attention, removing any guidance for how the Enterprises should address these challenges.
Under the EHFP regulations, the Enterprises were also required to develop EHFPs to identify and address barriers to sustainable housing opportunities, with both Enterprises incorporating the impacts of climate on housing affordability as well as goals related to climate resiliency projects. Tuesday’s order removes EHFP mandates indefinitely, meaning the Enterprises are no longer required to conduct public engagement and adopt transparent frameworks to overcome obstacles to affordable housing for underserved communities.
The FHFA’s neglect of supervision in both of these areas will likely have a chilling effect on the way the Enterprises incorporate climate risk, resilience, and equity into their risk management, strategy, and operations.
“We cannot ignore the risks climate change poses to our homes, our ability to obtain insurance, and ultimately the safety and soundness of our housing finance system,” said Caroline Nagy, associate director for housing at Americans for Financial Reform Education Fund. “Rescinding this guidance and waiving Equitable Housing Finance Plan requirements sends a signal to the Enterprises and the market that the FHFA will no longer support climate resilience, leaving homeowners to fend for themselves in an already historically challenging housing market.”
Ignoring climate-related vulnerabilities at a time when new housing supply is limited and existing housing stock is increasingly unsafe due to climate change will only increase housing costs and instability in the market, hurting homeowners and renters across the country while threatening the U.S. economy.
###