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HUD Must Disclose Flood Risk to Protect Low-Income Homebuyers

Columns appearing on the service and this webpage represent the views of the authors, not of The University of Texas at Austin.

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I was recently listening to NPR as they discussed the drastic increase in flooding across the country as a result of climate change. They went on to explain a deep environmental injustice that exists: the federal government’s Department of Housing and Urban Development, or HUD, has been selling flood-prone homes to unassuming buyers for years. Most of these homebuyers are low-income, because HUD sells houses that have been foreclosed on for more affordable prices.

Currently, HUD can sell these homes without letting buyers know that they are at dangerous risk for flooding and damage. You might, like me, think, that’s allowed? As of now, yes, but it should not be.

It’s time for federal regulation requiring HUD to disclose flood risk to potential buyers. HUD’s mission is to protect low-income homebuyers, and it must be held accountable for achieving that goal.

The Department for Housing and Urban Development was established in 1965 under Lyndon B. Johnson as the federal agency to address the nation’s housing needs, improve communities across the country, and enforce fair housing laws. Its mission is to meet the need for affordable rental homes, strengthen the housing market to bolster the economy, and protect consumers.

One of HUD’s programs is reselling homes that have been involved in foreclosures. Essentially, a previous owner was unable to pay the mortgage, and the house was seized by a bank and turned over to HUD, who now resells it. Between 2017 and 2020, HUD sold about 100,000 homes across the country to excited people who finally found a house they could afford. It seemed as if HUD was fulfilling its promise — creating strong communities and offering affordable housing for those most in need.

However, some striking new information about the selling of these homes has come to light.

NPR reported that homes sold by HUD between 2017 and 2020 were in designated flood zones at almost 75 times the rate of all homes sold across the country. In most cases, buyers of these homes knew little about the risk that they were entering into. Many were kept in the dark about how expensive it is to have flood insurance and what it might cost to manage flood damage. Additionally, communities where HUD sold homes had lower median household incomes than where no HUD homes were sold.

Not only was HUD keeping crucial information from people about their homes, it was keeping the information from some of the most vulnerable homeowners in our society.

And, for low-income people especially, putting homeownership at risk can be catastrophic.

We know that homeownership is a means of creating generational wealth. For first-time, low-income homebuyers, this is important. It means not only having a safe place for their children to come home to after school, but also creating stability for their families far into the future. Generational wealth is a means by which people pass down assets to their children and grandchildren — and one of the biggest ways that people pass down and inherit generational wealth is through real estate.

However, if someone is entering into a piece of real estate smack dab in the middle of a floodplain, one of the first steps in creating generational wealth is swept away.

And, if the government doesn’t take action now, things will only get worse.

For example, Baton Rouge, Louisiana, came up as a hotspot for sales of HUD homes in flood-prone areas. Baton Rouge has already seen enormous amounts of rain, tropical storms and flooding during the past several years, and reports show that Louisiana’s flood risk will skyrocket in the next 30 years.

This is why it is time to require that the Department of Housing and Urban Development disclose flood risk to potential homebuyers. This information has the potential to protect people’s hard-earned money, their life savings, and the generational wealth they are working to build for their families. Without it, HUD will never fulfill its pledge of protecting consumers and using housing as a platform for improving quality of life. Because — after all is said and done — those platforms will be under water.

Annika Olson is the assistant director of policy research at the Institute for Urban Policy Research and Analysis at The University of Texas at Austin.

A version of this op-ed appeared in the San Antonio Express News, Amarillo Globe-News, Lubbock Avalanche-Journal, Waco Tribune Herald, and the Austin American-Statesman.

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