The Second Envelope, and Who's Left Holding the Risk
Once a year, Karyn Perry's mortgage company writes to tell her the account it keeps for her insurance and taxes came up short. In 2025 the gap was $4,751: about $400 more a month, or the whole thing at once. For many homeowners that letter, not the insurer's, is where a premium increase actually lands. New Dallas Fed research suggests what happens next. Owners with good credit tend to move, stretched owners fall behind, and investors with cheaper coverage buy the houses. From there the risk keeps traveling, toward tenants and toward paid-off owners quietly dropping their policies.
The Second Envelope, and Who's Left Holding the Risk
Once a year, Karyn Perry's mortgage company writes to tell her the account it keeps for her insurance and taxes came up short. In 2025 the gap was $4,751: about $400 more a month, or the whole thing at once. For many homeowners that letter, not the insurer's, is where a premium increase actually lands. New Dallas Fed research suggests what happens next. Owners with good credit tend to move, stretched owners fall behind, and investors with cheaper coverage buy the houses. From there the risk keeps traveling, toward tenants and toward paid-off owners quietly dropping their policies.
Short Take
Picture a county floodplain administrator, the local official in charge of flood rules, going over FEMA's new grant notice with a pencil this fall. The money is for prevention: bigger culverts, deeper ditches, pipes that move rainwater before it moves your furniture. A neighborhood can get up to $5 million.
The first chore is a headcount. Draw a line around the homes the project would protect and count the ones carrying a federal flood insurance policy. If there are fewer than 35, FEMA rejects the application outright.
Now give the pencil to Buncombe County, North Carolina, which Hurricane Helene flooded in 2024. The GAO, Congress's watchdog, estimates that 5 percent of the county's high-risk properties carry federal flood coverage. Most sit outside FEMA's flood maps, where mortgage lenders don't require it.
So the money goes first to houses that already paid in. The surest way for the rest to get counted is a flood bad enough for a disaster declaration. After one, FEMA hands uninsured aid recipients temporary policies, and those count.
Climate Liability Reading
