FEMA declarations, local risk and cost of borrowing in california

Publication Date

3-1-2025

Document Type

Article

Publication Title

Journal of Economics and Finance

Volume

49

Issue

1

DOI

10.1007/s12197-024-09693-8

First Page

45

Last Page

69

Abstract

This paper examines the relationship between mortgage interest rates and natural disasters in California at the county level from 2018 to 2021. Using data from the Consumer Financial Protection Bureau’s Home Mortgage Disclosure Act (HMDA), we focus our study on home purchase-related loan originations within the state. We find that California counties affected by natural disasters experience elevated mortgage interest rates for minority borrowers. However, this relationship is not observed among nonminority borrowers. Our analysis indicates that mortgage interest rates are higher particularly for Asian and Hispanic borrowers, and only for nonjumbo loans. These results highlight increased financial burdens and potentially lower access to mortgage credit for certain minority groups following natural disasters in California.

Keywords

Climate change, FEMA declarations, Jumbo loans, Minority mortgage access, Residential mortgage credit

Department

Accounting and Finance

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