First Street’s flood risk data: 6 million households more at risk?

Climate change is affecting the housing sector. For example, it’s challenging current flood risk calculations and maps that underestimate the warmer atmosphere effect. Flood risk research fintech First Street Foundation (FSF) is addressing that problem through its newly launched Flood Factor platform, an online visualization tool that offers property specific, past and present flood risk data, along with future risk assessments, for more than 142 million homes and properties across the country. And what Flood Factor reveals could be a daunting discovery for 6 million households

The publicly released data taps on decades of peer-reviewed research and assigns every property in the contiguous United States a “Flood Factor” score from 1 to 10, “based on its cumulative risk of flooding over a thirty-year mortgage,” the nonprofit explained in a statement.

The Federal Emergency Management Agency (FEMA) maps list 8.7 million properties as having substantial risk, or within Special Flood Hazard Areas (SFHAs). The FSF Flood Model identifies nearly 70% more, or 14.6 million properties that face the same level of risk. This discrepancy means nearly 6 million households and property owners either have underestimated the real risk, or are unaware of it.

To bridge the gap, FSF said, it identifies the likelihood of previous flooding by recreating 55 past hurricanes or other events; calculates the current probability of tidal, storm surge, or rainfall for individual properties; maps precipitation as a stand-alone risk, and includes areas that FEMA has not mapped.

FSF’s model adjusted the maps “to future environmental factors,” incorporating various technical metrics to calculate future risk, such as changing sea levels, warming sea surface and changing precipitation patterns. Therefore, “the number of properties with substantial risk grows to 16.2 million by the year 2050.”

A FSF Model report, titled “The First Annual National Flood Risk Assessment: Defining America’s Growing risk” highlights significant national, state, and city data variations.

“In environmental engineering, there is a concept called stationarity, which assumes that today is going to be like yesterday, and tomorrow is going to be like yesterday,” said Dr. Ed Kearns, FSF’s chief data officer, a concept that does not work today. “FEMA’s method assumes stationarity, First Street’s does not.”

The model was developed by more than 80 of the world’s leading hydrologists, researchers and data scientists from FSF, Columbia University, Fathom, George Mason University, Massachusetts Institute of Technology, to mention a few. It builds on decades of peer-reviewed research and model outputs, as well as data from FEMA, and other government agencies, to create the country’s first publicly available comprehensive flood risk model, the nonprofit said.

The First Street Foundation Flood Lab is sharing Flood Model and data with roughly 100 researchers from 20 of the world’s top academic institutions who will analyze how flood risk affects the U.S. housing market, and other issues.

“Sophisticated investors have privately purchased flood risk information from for-profit firms for years,” said FSF’s executive director Matthew Eby. FSF has taken the data to the next level by using peer-reviewed science and “correcting an asymmetry of information by providing free access to everyday Americans.”

Synergy One announces management buyout

Synergy One Lending, Inc., of San Diego, Calif., announced the management-led asset purchase of the company’s distributed retail channel and the Synergy One brand from Mutual of Omaha Mortgage. Synergy One did not disclose the specific terms of the acquisition.

Mortgage lending veterans Steve Majerus, CEO of Synergy, and its President Aaron Nemec led the merger purchase. 

Currently licensed in 29 states, Synergy has operational hubs in Roseville, California, Boise, Indiana, Denver, Colorado and Dallas, Texas. 

During the past three years, Synergy has quadrupled its loan production, according to the company website, “breaking into the top 100 retail mortgage lenders in 2019,” and was ranked #53 in Scotsman’s Guide.

“Aaron and I are sincerely grateful for the opportunity to lead Synergy One into the future,” said Majerus. “Our confidence in our team and our collective ability to execute couldn’t be higher.”

Nemec previously served as Synergy’s National Head of Production, after serving in the same capacity at Guild Mortgage and Academy Mortgage.

“This acquisition enables us to more aggressively pursue our pipeline of opportunities,” continue to evolve the operational and sales platforms, and build a fintech-enabled company, said Nemec.

Report: State penalties cost banks $17B since 2000

Penalties are costing banks a bundle. According to an assessment of regulatory enforcement actions taken over the past two decades by states, against financial services companies, such penalties amounted to $17 billion, according to Violation Tracker. The free, data driven, corporate research project launched by Good Jobs First (GJF), shows most of the funds came from cases brought by New York State against major U.S. and foreign banks.

California has been the second most successful state, and its biggest settlement was the $225 million paid in 2017 by Ocwen Loan Servicing for mortgage abuses.

GJF collected data on 15,000 successful cases brought by state banking, consumer finance, securities and insurance regulatory agencies since year 2000, with penalties of at least $5,000. Yet, the number of cases, and penalty amounts, “vary greatly from state to state,” the report found.

New York emerged as the most aggressive state generating a penalty total of more than $11 billion from 412 cases. The NY State Department of Financial Services filed complaints against some of the world’s largest financial institutions winning major settlements. One such example is the $2.2 billion paid by the French bank BNP Paribas for violating international economic sanctions.

California’s total penalties amounted to just over $1 billion, from more than 2,000 successful legal actions, which represents the highest number of cases compared to all other states.  

Three other states have collected more than $100 million in penalties: Arizona won $665 million from 488 cases, Texas $632 million from 1,097 cases, and New Jersey $339 million from 398 cases. GJF also identified more than 100 cases in which financial regulators from different states brought action jointly and collected about $2 billion in penalties since 2000.

The most-penalized companies were Citigroup $251 million, American International Group $204 million, and Bank of America $201 million. 

“The role of state regulators has become more important than ever, given the weakening of enforcement at the federal level,” said First Research Director at GJF, Philip Mattera, who leads the work on Violation Tracker report.

With the addition of the new state cases, Violation Tracker now contains 437,000 entries with total penalties of $627 billion, covering workplace, financial, or other actions brought by more than 50 federal and 200 state and local agencies, according to GJF.

GJF also is running the Covid Stimulus Watch, another accountability website designed to track companies that get help through the Coronavirus Aid, Relief & Economic Security (CARES) Act programs.

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