Why Haven’t Loan Officers Been Told These
Facts? Homeowners Insurance: What are the Risks?
Mortgage Loan Officers (MLOs) often receive questions about insurance coverage and collateral risk. As we approach peak natural disaster season, it is beneficial for MLOs to have insurance resources and, when appropriate, handouts to provide to their customers.
One concern with providing non-interactive expert guidance to consumers is that it may lead them to view you as their source of insurance information. If you do offer resources, it’s essential to include a disclaimer about the content and encourage consumers to contact a subject matter expert for additional assistance.
Generally, it’s best to direct questions about insurance and risk to those who are most qualified to address specific concerns. A knowledgeable insurance agent can be very helpful in this situation.
Yet, when a valued customer asks for your opinion on particular types of coverage or risks, it can be beneficial to have a few resources available. In addition to recommending that they consult a qualified insurance agent, consider providing some resources to help illuminate the matter.
Many homeowner communities are concerned about flood and earthquake coverage. Investors sometimes focus on mold or other tenant-related liability issues.
Homeowners policies are generally standardized across the country, although specific states and insurance companies may provide variations or use different names like “standard” or “premium” coverage. The only significant exception is Texas, where homeowners policies differ somewhat from those in other states. Check out the “Insurify” hyperlink below for a basic primer on homeowners insurance.
Reach out to multiple insurance agents to discover valuable resources that empower property owners to gain a deeper understanding of risks. Taking this step can improve your credibility with both insurance agents and customers.
Rice University’s Baker Institute Disaster Dashboard
US Census Bureau Zombie Vulnerability Index
Insurify’s Homeowners Insurance Categories
BEHIND THE SCENES: 2025 State of the Nation’s Housing
The Joint Center for Housing Studies of Harvard University has released its 2025 State of the Nation’s Housing. In a nutshell, alarming. The report’s executive summary strikes a tone that is appropriate to the report. Not exactly summer beach reading. However, as Sun Tzu states in The Art of War, “In the midst of chaos, there is also opportunity.” Instead of embracing gloom, is there an opportunity to seize on? If so, who can you involve in the solution?
Review the summary and some excerpts below. For the full report, please see the hyperlink.
Report Executive Summary
In 2025, households and housing markets face an ever-more challenging environment. High home prices and elevated interest rates reduced homebuying to its lowest level since the mid-1990s. Increases in both insurance premiums and property taxes have heightened financial stress on homeowners and landlords. And, despite an abundance of new apartments, high rents have left more people than ever cost burdened, and have contributed to a sharp rise in homelessness. Meanwhile, unprecedented destruction from wildfires has further highlighted the growing threat to the housing stock from climate-related disasters. At the same time, federal housing support is lessening, creating uncertainty regarding the availability of crucial assistance programs. The looming possibility of an economic downturn is exacerbating the nation’s already-enormous housing challenges.
Excerpts From the Report
- The rising cost of homeownership is partially explained by steep increases in insurance premiums and property taxes. Home insurance premiums jumped 57percent from 2019 to 2024, according to Freddie Mac. The sharpest increases were in areas with the greatest risk of a climate-related disaster. In Miami, annual premium rates average $17.20 per $1,000 of coverage, according to the ICE Mortgage Monitor, or an annual payment of more than $11,000 on the metro’s median-priced home (of $644,000).
- Net household growth decelerated for the second year in a row in 2024, and the underlying drivers suggest an extended slowdown is on the horizon. Last year, the US added just 1.56 million households, on the heels of 1.61 million in 2023. Growth has further slowed to 1.26 million households annually as of the first quarter of 2025. By contrast, the nation averaged 1.93 million annually between 2019 and 2022.This downturn is occurring at a moment of increasing uncertainty regarding multiple drivers of household growth, including the employment rate, income growth, immigration levels, and shifting demographics. The immigration surge ended in early 2025, removing the largest source of population growth and, in turn, the largest driver of new housing demand. At the same time, demographics are becoming less favorable for further growth. Baby boomers will start to turn 80 in 2026 and will soon experience mortality rates that overshadow new household formations.
The Outlook
Looking forward, state and local governments will undoubtedly play a larger role in addressing record-breaking housing needs as the federal government contemplates the withdrawal of vital supports. Continued innovations by state and local governments regarding housing policies, regulations, and financing models will help. However, the federal government underpins many state and local programs, and the scale of that funding and assistance will be nearly impossible to replace. State and local governments simultaneously facing funding cuts for healthcare, education, and other crucial services may have to make difficult decisions about spending priorities.
The private sector will also need to innovate to deliver more affordable homes more quickly in a changing landscape. The mounting uncertainty around broader economic instability, including the extent and duration of tariffs, will likely deter significant investments in off-site construction techniques. Deportations could reduce the already-strained construction labor force. And declining consumer sentiment could slow housing demand.
The nation’s overlapping housing crises have grown in urgency over the last two decades and can no longer go unaddressed. The costs, both to the economy and to households, are too steep. Proven solutions exist. The question is whether we will enact them.
JCHS State of the Nations Housing
Tip of the Week – Sign Up for 2025 CE
Expanding your product offerings is an effective way to enhance your business’s vitality. This year, the Loan Officer School is surveying non-government financing options for construction and renovation projects.
The shortage of affordable housing is unlikely to be resolved anytime soon. As affordable, move-in-ready housing solutions remain hard to find, the demand for construction and renovation loans is expected to increase. According to the JCHS, Harvard University, the US remodeling market soared above $600 billion in the wake of the pandemic and, despite recent softening, remains 50 percent above pre-pandemic levels.
Discover how to enhance borrower advantages through construction and renovation financing.
- Enhanced housing affordability.
- Housing options for aging or disabled borrowers.
- Housing solutions for borrowers caring for aging or disabled family members.
- Multi-generational housing solutions.
For any questions or inquiries regarding state education needs, please feel free to call.
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