The U.S. housing market is facing increasing risks from more frequent and damaging natural disasters. Insurers are the first to endure the losses.... but the mortgage industry might be in a more precarious position. Insurers renew policies every year, allowing them to raise premiums or cut underwriting when a market becomes too risky.

Mortgage lenders, on the other hand, could be stuck with property—and its risks—for as long as 30 years, often on fixed interest rates. Often insurance payouts don’t cover the total costs to rebuild which could make it difficult for homeowners to make mortgage payments, especially as high insurance costs further strain their bank accounts. In extreme cases, the damaged properties might not recover at all. However such risks aren’t incorporated in mortgage pricing. (BARRONS)