[chuankl]

Summary:

Real estate properties in Florida are increasingly at risk due to climate change.

Established insurers ran their numbers and noped out of Florida quickly.

New low-quality insurers came in and filled the vacuum.

Established rating agencies looked at the new low-quality insurers and came to the conclusion that they are trash.

New low-quality rating agencies came in and declared those new low-quality insurers to be a-ok.

Lenders, fearful of being left holding the bag (from climate losses that are likely to bring down the low-quality insurers), sold mortgages in Florida to Freddie Mac and Fannie May (i.e., the GSEs, which are financial institutions that purchase mortgages en masse and implicitly backed by the US Government).

Freddie Mac and Fannie May bought those mortgages because the properties are insured by (low-quality) insurers declared a-ok by (low-quality) rating agencies.

As is usually the case, the government will be left holding the bag.

[ok_dad]

> As is usually the case, the government will be left holding the bag.

The taxpayers, really. We’re going to pay for stupid decisions by politicians voted in by Florida people.

[droopyEyelids]

Its malicious not stupid. The florida politicians and businessmen are all getting what they want while externalizing all the risk

[throwup238]

The alternative is the NFIP [1], isn't it? The federal government was always going to be left holding the bag.

Meanwhile, responsibly run solvent programs like the California FAIR Plan for fire insurance have to fund it all from premiums and can survive major fires no problem.

[1] https://en.wikipedia.org/wiki/National_Flood_Insurance_Progr...

[jimmygrapes]

NFIP is really strict about what is covered and takes ages to settle. It's specifically designed to NOT cover dumb decisions by home builders/buyers.

[sidewndr46]

Wouldn't that only cover flood damage? I grew up on the Gulf Coast and what counts as flood damage from my experience is very little

[SoftTalker]

Similar in a way to non-dischargable student loans. When lenders are not exposed to the real risk of their loans, someone always ends up holding the bag.

Mortgage loan rates in Florida probably ought to be in double-digits.

[johnchristopher]

> Similar in a way to non-dischargable student loans. When lenders are not exposed to the real risk of their loans, someone always ends up holding the bag.

Students (people) are more likely to suffer from climate change and will have to fight it during their lifetime than those new low-quality insurers will have ever to, regardless of who hold the bags.

Let the fuckers hold the bag and give a fighting chance to the people rather than building our economy on the back of debt ridden slaves.

[ejstronge]

> Lenders, fearful of being left holding the bag

This is where the logic breaks down - lenders are selling these mortgages irrespective of any other conditions.

The only loans that aren’t sold are unsaleable investor and boutique loans. These wouldn’t be offered to normal borrowers in the first instance (since the loans of a normal borrower would be targeted for resale)

[0cf8612b2e1e]

What I am missing is how do you profit from this. Many of these new entries have to know that the big insurance companies left for a good reason. That the smaller entries cannot absorb the risk they will be facing.

So, what’s the play? I have to assume there is some smart money who has identified a way of discharging the liabilities while still collecting pay, but how does it work?

[Dalewyn]

The Great Recession 3.11 For Workgroups?

(v2 was covid.)

[User23]

> As is usually the case, the government will be left holding the bag.

To be fair last-resort bag-holder is one of government’s primary jobs right behind monopolizing violence.

[schmidtleonard]

Then what the hell are we paying insurance companies for?