The Federal Government Sells Flood-Prone Homes To Often Unsuspecting Buyers, NPR Finds


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Homes that were sold by the Department of Housing and Urban Development between January 2017 and August 2020 are in federally designated flood zones at almost 75 times the rate of all homes sold nationwide in that period. New Jersey is one hot spot. Here, flooding from Tropical Storm Henri in Helmetta, N.J., this August.

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Interviews with people who bought homes from HUD in multiple states make it clear that many buyers don’t learn that their houses are in an official flood zone until after they’ve made an offer or paid a nonrefundable deposit. And even if a house doesn’t flood immediately, the cost of managing flood risk can be significant.

There is no federal regulation requiring HUD to disclose flood risk to potential buyers. Most buyers find out their new house is prone to flooding when they are notified that they must purchase flood insurance, which happens so late in the homebuying process that it is often too late for families to back out of the purchase.

That’s what happened to McCanney. «That’s the one disappointment in this area. We’re in a flood zone, so we have to pay pretty expensive flood insurance,» he says. «I didn’t really take that into account when we first bought it.» This summer, a rainstorm flooded the park across the street and sent a foot of water into McCanney’s basement after his sump pump broke. McCanney says they’re eventually hoping to move to a house that’s not in a flood zone.

Housing and climate experts say the pattern of HUD home sales in flood plains raises questions about whether the agency fully appreciates the growing risks posed by climate change. And it suggests the housing agency may be inadvertently exposing families to catastrophic inundation, such as a foot or more of water in their home.

«This is an incredible insight,» says Laurie Schoeman, the resilience director for the national housing nonprofit Enterprise Community Partners, which manages affordable housing around the country. «It only bolsters the reality that a lot of homes that have provided shelter to low-income households are in areas of greater risk. These homes are in really vulnerable areas, and it puts households at risk.»

HUD spokesperson Michael Burns says one reason that HUD homes are disproportionately located in flood zones is that the agency does not choose the homes it sells and is likely to end up with homes that banks can’t or won’t sell because they are less marketable. Being located in a flood zone can make a home less marketable, he says, because buyers need flood insurance.

The agency is aware of climate-driven flood risks to homes, Burns says. «Millions of people in the United States live in areas prone to flooding, a threat that is only growing as climate change worsens,» he wrote in a statement to NPR. «Ensuring that federal agencies, including HUD, have the right tools and policies in place to increase resilience nationwide is a key priority of the Biden-Harris Administration for combating climate change and building strong, equitable communities.»

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HUD does not disclose flood risk in its home listings

Many buyers of HUD homes don’t learn that their houses are in an official flood zone until after they’ve made an offer. That is too late in the process for many families.

A property’s flood risk needs to be disclosed early, when potential buyers are still weighing their options and before they make a deposit, as NPR has reported.

HUD could prominently display information on flood risk and the cost of flood insurance in its home listings. The underlying information is already available from a sister agency: The Federal Emergency Management Agency (FEMA) provides the vast majority of residential flood insurance and publishes official flood maps.

But unlike real estate sites such as Realtor.com and Redfin, the official HUD Home Store website posts listings on the main page that buyers see without information about flood risk. Many HUD homes are cross-listed on multiple websites, but HUD specifically directs potential buyers to its website.

HUD did not respond to questions about why it does not include flood zone designations more prominently in the listings for the homes it sells.

Schoeman says HUD should work with real estate agents and local groups that often help market and sell HUD homes to make sure that the risk of flooding is clear from the get-go. Those groups could also help buyers understand how to mitigate flood risk — for example, by waterproofing a basement, updating yard drainage or raising the home’s foundation.

«We need to let people know, ‘Your dream house is wonderful, and here are the steps you’re going to need to take to protect it from flooding, because you’re in a flood zone,’ » says Schoeman. «That’s the conversation we need to have. Not, ‘Here’s your house!’ And then you find out later after the first flood, ‘Oh boy, I’m in a really bad situation.’ «

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Housing and climate experts say the pattern of HUD home sales in flood plains raises questions about whether the agency fully appreciates the growing risks posed by climate change. Climate change helped fuel Hurricane Ida, which caused deadly floods from the Gulf Coast to New England, including in Norco, La.

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Jonathan Stewman bought his house in Denham Springs, La., in the spring of 2019. Homeownership was a lifelong dream, and he was excited to move in with his wife and two toddlers. They painted the porch and put in some new front steps. Now, they like to ride four-wheelers in the big backyard, and he’s building the kids a swing set.

Stewman grew up in an apartment in nearby Baton Rouge and always dreamed of having his own place, a family and a yard for the kids. «I never knew what it was like to stay in a house. So when I moved here, it felt like home immediately,» Stewman says.

Stewman works overnight shifts at a local refinery. He says they purchased the house for just $110,000. He wouldn’t have been able to afford anything more.

Stewman purchased his home just three years after a massive, climate-driven rainstorm dumped more than 20 inches of rain over the area in less than 24 hours. Stewman and his wife were told by their real estate agent that their house took in about 2 feet of water that day. But the benefits of the house seemed to outweigh the risks. «I got a good deal on it,» he says.

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Baton Rouge, La., and its suburbs experienced massive floods in August 2016. In the years since, state officials have worked with the federal government, including HUD, to move people out of harm’s way. HUD simultaneously sold homes in official flood zones in the area.

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Akouete Yemey purchased his house in Roanoke, Va., from HUD. The house is located in the highest-risk flood zone. Yemey says buying directly from the government initially made him trust that the house was safe. He is considering a government buyout so his family can move to higher ground.

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Akouete Yemey purchased his house in Roanoke, Va., from HUD. The house is located in the highest-risk flood zone. Yemey says buying directly from the government initially made him trust that the house was safe. He is considering a government buyout so his family can move to higher ground.

Ryan Kellman/NPR

In Florida, federal data obtained by NPR and member station WLRN show that four homes sold by HUD in Miami-Dade County are listed as «severe repetitive loss properties» by FEMA. Such properties have been flooded and rebuilt multiple times, at taxpayer expense. All together, the properties incurred nearly $500,000 in flood insurance payouts between 1999 and 2015.

Flagging them as «severe repetitive loss properties» is intended to reduce the cost to the federal government of repetitive rebuilding, as well as protect residents and prevent them from living in high-risk areas by prioritizing the houses for elevation or buyouts.

HUD did not comment on why it sells severe repetitive loss properties.

And local officials in other states echo the concerns raised by Forbes in Louisiana. The government of Roanoke, Va., has spent years trying to move families out of repeatedly flooded homes along a creek, only to have HUD step in and sell one of the houses to a new owner after it fell into foreclosure.

A similar dynamic has played out in Burlington County, N.J., where Larry McCanney bought his home. The county is extremely prone to flooding, and buyouts are an important part of the local government’s strategy for preventing repeat flood damage. Some of the funds for buyouts have come from FEMA and HUD, more evidence of how parts of the federal government are sometimes in conflict on climate change.

NPR’s analysis shows that HUD sold more than 30 flood-prone properties in the county between 2017 and 2020, including a house in a creek-side neighborhood where the county has actively tried to purchase repeatedly flooded homes.

Mary Pat Robbie has directed the county’s resource conservation department for 20 years and was unaware of the HUD sales. She says it’s frustrating that HUD never reached out to the county. If it had, perhaps the county could have stepped in to prevent a flood-prone home from changing hands.

«You’re really preventing that buyer of the house from dealing with the agony of having their property destroyed,» she says. Robbie has worked directly with many homeowners who survived floods in the county, and she says people often don’t understand how upsetting it is.

«I’ve dealt with a lot of homeowners,» she says. «They lost so much of sentimental value that they’re never going to get back.»

HUD did not respond to specific questions about how its home sales could affect home buyouts or how the agency works with local and state officials.

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Methodology: Through a Freedom of Information Act request, NPR obtained records of real estate owned (REO) single-family properties that HUD sold from January 2017 to August 2020. NPR cross-referenced the records with FEMA’s flood maps to identify homes in special flood hazard areas and also cross-referenced the records with American Community Survey data to analyze neighborhood characteristics of these homes. You can access NPR’s analysis and data here.

  • Department of Housing and Urban Development
  • National Flood Insurance Program
  • floods
  • FEMA
  • Housing
  • global warming
  • mortgage
  • climate change

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