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71 May 2025 J O U R N A L May 2025 » mortgages has somewhat decreased. After restating to 2.18% in Q3, the Q4 2024 MMDI fell to 2.12%. The decline in default risk in Q4 2024 is a result of persistently strong borrower profiles, which include lower average loan-to-value (LTV) ratios for the quarter and somewhat higher average FICO scores. Because there were fewer cash-out refinance loans and purchase loans had better credit characteristics, borrower risk dropped from 1.46% in Q3 2024 to 1.39% in Q4. "Even with the slight decline in default risk this quarter, it's important to consider how evolving economic uncertainty can impact mortgage perfor- mance," said Jonathan Glowacki, Prin- cipal at Milliman and co-author of the MMDI. "Mortgages are long-duration contracts, and economic events can im- pact both new mortgages and seasoned mortgages. We will continue to monitor loan performance to evaluate how policy decisions and regulatory changes are impacting the mortgage market." The Q3 2024 MMDI statistics have been corrected from 2.12% to 2.18% to reflect lower-than-expected home price appreciation, as you can see when exam- ining Q3 to Q4 movements. The MMDI is based on a baseline estimate of future home prices, and its values are updated in later releases to reflect changes in projections and actual circumstances. MAJORITY OF U.S. HOMES LACK FLOOD INSURANCE DESPITE RISING RISK F looding is the most common and costly natural disaster in the United States, yet 96.7% of homes lack f lood insurance, according to a report by ValuePenguin. In 2024, the average home sustained nearly $34,000 in f lood damage, with the most significant losses linked to Hurricanes Helene and Milton, which devastated parts of Florida, Georgia, Kentucky, North Carolina, South Carolina, Ten- nessee, and Virginia. "Climate change continues to drive sea-level increases and make weather more extreme," ValuePenguin Insur- ance Expert and Spokesperson Divya Sangameshwar said. "Flood-prone ar- eas around the country are expected to grow by nearly half in just this century." Despite the rising threat, f lood in- surance isn't mandatory unless a home is in a FEMA-designated Special Flood Hazard Area (SFHA). This leaves many homeowners financially vulnerable. Just one inch of f loodwater can cause $25,000 in damage, yet many still choose to go uninsured. » Only 3.3% of U.S. homes (4.7 million) have f lood insurance, and in 26 states, less than 1% of homes are covered. In Minnesota, Wisconsin, Utah, Mich- igan, and Ohio, coverage rates drop below 0.4%. » 36 states saw a decline in flood in- surance enrollment in 2024, with the biggest drops in Utah (-37.5%), North Dakota (-10.1%), and West Virginia (-87.6%). » The average flood insurance claim in 2024 was $33,906, with the highest claims in Florida ($38,970) and North Carolina ($23,757). » 6% of reported flood losses occurred outside SFHAs, proving that f lood- ing isn't just a coastal problem. The District of Columbia (85.6%), Utah (81.3%), and Wyoming (61.6%) had the highest share of non-SFHA f lood losses. Sangameshwar warns that low f lood risk doesn't mean no risk, and homeowners' and renters' insurance does not cover f looding. As cli- mate-driven disasters intensify, the lack of coverage could leave millions financially devastated.