"The problem, though, is that this type of insurance is generally more expensive than the insurance you might find on your own. So it's not a great option.
And that assumes it even is an option. If your mortgage lender can’t procure insurance for you, you risk having your mortgage go into default, leading to foreclosure."
Seems like a catch-22, is the mortgage lender going to forceclose on your house if they can't sell it to anyone else?
There are already a lot of places in the US where you can’t get a mortgage. In high rise condos, especially, a lender will want to look at the financial situation of the association. Make sure it is holding enough reserves, etc. If those numbers don’t meet their standards, no mortgage for you. Note that each lender has different standards and different ways to do math!
This has been the case for decades. There are probably a few dozen (or more) buildings like this in every large city.
And life goes on. Nobody will come rescue you from financial loss.
Edit - also keep in mind that these situations aren’t permanent. These cash buyers stand to profit if they buy low, fix things to the point that mortgages are possible again, and then sell. In a wildfire zone, that could mean that a group buys up many homes in the same area for cheap, tears some down to make buffers, modifies others for resiliency, etc. who knows
Either these problems are fixable, and the institutions involved have simply decided not to fix them for some other reason, or they are not. The latter case would imply some kind of grossly ruinous effects from climate change, which those same institutions seem to be expressing no particular urgency to address.
You cannot address climate change as an insurer. You can either price the risk or withdraw from offering policies where the risk exceeds the economics. Insurance is for tail risk events, not chronic payouts.
"The problem, though, is that this type of insurance is generally more expensive than the insurance you might find on your own. So it's not a great option.
And that assumes it even is an option. If your mortgage lender can’t procure insurance for you, you risk having your mortgage go into default, leading to foreclosure."
Seems like a catch-22, is the mortgage lender going to forceclose on your house if they can't sell it to anyone else?
Cash buyers.
There are already a lot of places in the US where you can’t get a mortgage. In high rise condos, especially, a lender will want to look at the financial situation of the association. Make sure it is holding enough reserves, etc. If those numbers don’t meet their standards, no mortgage for you. Note that each lender has different standards and different ways to do math!
This has been the case for decades. There are probably a few dozen (or more) buildings like this in every large city.
And life goes on. Nobody will come rescue you from financial loss.
Edit - also keep in mind that these situations aren’t permanent. These cash buyers stand to profit if they buy low, fix things to the point that mortgages are possible again, and then sell. In a wildfire zone, that could mean that a group buys up many homes in the same area for cheap, tears some down to make buffers, modifies others for resiliency, etc. who knows
Either these problems are fixable, and the institutions involved have simply decided not to fix them for some other reason, or they are not. The latter case would imply some kind of grossly ruinous effects from climate change, which those same institutions seem to be expressing no particular urgency to address.
You cannot address climate change as an insurer. You can either price the risk or withdraw from offering policies where the risk exceeds the economics. Insurance is for tail risk events, not chronic payouts.
There's no profit to be made so they're expecting the government to assume the risk, like flood insurance (NFIP)