Is Flood-Risk Uncertainty Redlining Your Neighborhood?
7/19/25 – Eight years after Harvey, we still don’t have new flood maps. That creates flood-risk uncertainty.
Harris County Flood Control District (HCFCD) has yet to release flood maps based on Atlas-14 data developed 4 years ago. HCFCD says it is waiting for FEMA to approve its maps, but FEMA delays have dragged on for years. And FEMA doesn’t need to approve the maps for many purposes.
Meanwhile, studies have found that flood-risk uncertainty may be causing lenders to raise mortgage rates and credit requirements. It’s also causing insurers to leave markets with uncertain risk or not renew policies that may be a mortgage requirement.
The ripple effects of flood-risk uncertainty affect everyone. But they weigh most heavily on low-to-moderate income (LMI) groups with less discretionary income. Those groups may find themselves priced out of the housing market as lenders and insurers seek to cover their uncertain risks.
Worse, any resident – rich or poor – may unknowingly buy a home that they thought was flood safe only to see a flood destroy it.
Ripple Effects of Flood-Risk Uncertainty
Studies show that flood-risk uncertainty may:
- Induce people to buy homes they think are safer than they really are
- Cause mortgage lenders to tack extra points onto their mortgages or raise downpayment requirements
- Lead lenders to force buyers to purchase flood insurance they may not need
- Increase flood-insurance rates to a level that makes monthly mortgage payments unaffordable for many.
Those factors affect all income groups. But those with lower incomes and less job security feel the greatest impact and may find themselves priced out of markets.
Spreading Impacts of Uncertainty
This week, First Street Foundation hosted a fascinating hour-long webinar about how FEMA cuts will impact real estate, lending, home buying, home building, and insurance markets.
The uncertainty affects tolerance for risk in all those markets. No one knows yet how the National Flood Insurance Program (NFIP) will be affected.
But the absence of up-to-date flood maps, or any flood maps at all in some cases, complicates that risk. A New York Fed study in 2024 found that lenders were more reluctant to originate loans in “hidden-risk” zones. When they do, they loan less, charge higher rates, impose stricter credit requirements, and may resell the mortgages to offload risk. The study also found “This effect is weaker for high income applicants.”
I know the owner of a billion-dollar bank who has withdrawn entirely from residential mortgage lending because of the uncertainty.
Federal Government Shedding Risk
According to First Street, policy shifts at the federal level seem intended to transfer the risk of weather disasters onto property owners, investors, lenders, and local governments.
Example: Instead of subsidizing flood insurance like it used to, FEMA’s new Risk-Rating 2.0 is making NFIP rates more closely reflect losses.
On average, NFIP policy costs have increased 35% under Risk-Rating 2.0 so far. And annual rate increases are capped by law.
Meanwhile, developers continue to build in risky areas, elevating homes only enough to meet the outdated requirements of flood maps developed 20 to 50 years ago. Most people underestimate the risk associated with that.
No Legal Reason to Wait for FEMA
Some people think that only FEMA can release flood maps. That’s not true. Only FEMA can release maps used by NFIP as the basis for national flood insurance. But states and counties can release their own maps for their own purposes.
Counties elsewhere have done so to help guide development, make regulatory decisions, establish stormwater detention standards, raise building codes and improve floodplain management.
For all those purposes, HCFCD embarked on a massive effort to update the county’s flood maps after Harvey. But then the county balked for some reason.
The District, submitted its new maps to FEMA and expected FEMA to issue new preliminary flood-insurance rate maps by Spring or Summer in 2022. That didn’t happen.
HCFCD then issued a statement in July 2022. For unspecified reasons, it said it would wait and “… follow FEMA’s formal, regulatory FIRM [flood insurance rate map] update process.” (Despite other urgent, non-insurance-related needs.)
Some claimed at the time that Precinct 2 Commissioner Adrian Garcia held up release of the new maps to enhance his re-election chances. I have been unable to verify that. But one thing is certain.
Nothing legally prevents HCFCD from releasing its flood maps.
Yet as you read this, developers in Harris County and surrounding areas are filing permit applications to build infrastructure and homes in areas that will likely flood. One fought all the way to the Texas Supreme Court for the right to build in a flood-prone area.
And Ryko wants to build 7,000 homes in another flood-prone area west of Kingwood. Just one problem: the homes could be under 7 to 25 feet of water – or more – if we get another Harvey.
Unsuspecting families who buy such homes based on antiquated flood maps face huge flood and financial risk.
Shakespeare was right. “What’s past is prologue.” Of the 154,170 homes that flooded in Harris County during Harvey, 64% did not have flood insurance…largely because of unrecognized risk.
Insurance Exodus
Unrecognized risk is also wreaking havoc in the insurance market. ChatGPT produced this table of insurers withdrawing or reducing coverage in high-risk states.
| State | Insurers Withdrawing or Reducing Coverage |
| California | State Farm, Allstate, AIG, Chubb |
| Florida | State Farm FL, Farmers, AAA, UPC Insurance (exited), plus others post-2004 |
| Louisiana | ~20 insurers left high-risk parishes; Lighthouse went insolvent |
| Across coastal/high-risk states | AIG, AXA, Chubb pulling back |
In Texas, I’m not aware of any insurers leaving the state. At least, not yet. But several (State Farm, Farmers, and Allstate) have reportedly restricted coverage. They do that primarily through non-renewals at policy expiration if flood-risk changes (i.e., with new maps) or a property experiences a flood loss.
Make New Flood Maps Public Now
Concealing information from people that puts their lives and life savings at risk is just plain cruel.
To keep residents safe, give them the best available data NOW. And let them decide how much risk they can tolerate based on fact, not fiction.
Posted by Bob Rehak on 7/19/2025
2881 Days since Hurricane Harvey
