A HUD flood? The federal government agency is selling homes to people in flood-prone areas without fully disclosing the danger or cost, a recent investigation showed.
Homes sold by HUD are disproportionately in flood-prone areas when compared with all national home sales recorded by Zillow, the NPR report showed. Over the course of four years, HUD home sales were sold in such risky areas at a rate 75 times higher than all homes sold in that span. More than 20 percent of HUD homes sold in Louisiana were in flood plains, as well as almost 12 percent in Florida and 7 percent in New Jersey.
Making matters worse, HUD isn’t making the risk clear to buyers, NPR reported. Many buyers weren’t told until after making an offer or deposit, at which point was often too late to back out. Also, buyers could be forced to buy unexpected and costly flood insurance or to raise the home to mitigate risk.
An element of inequity is also apparent. Reflecting the type of homes HUD tends to wind up with, the department sold homes in neighborhoods with a lower median income on average than the neighborhoods where it didn’t. That’s in contrast to a directive by President Biden to increase equity in addressing climate change, a factor in flooding.
HUD sells foreclosed homes with a federally insured mortgage handed over by a bank. On average, the department has sold close to 25,000 homes annually from 2017 to 2020. The agency didn’t respond to questions from NPR about why it doesn’t make flood zone designations more clear in home listings.
New flood maps from FEMA are due in 2024, which could hamper development and increase the need for flood insurance.
[NPR] — Holden Walter-Warner