Fitch Adds Climate Risk to RMBS Ratings – NMP Skip to main content

Fitch Adds Climate Risk to RMBS Ratings

Jun 06, 2019
Photo credit: Getty Images/urfinguss

Fitch Ratings is planning incorporate natural disaster and catastrophic risk into its ratings of residential mortgage-backed securities (RMBS).
 
According to a Reuters report, the ratings agency’s adjustment would add a new penalty to existing risk metrics on ratings which have already been issued. This action is expected to identify mortgage pools where the exposure to natural disaster risk is higher than average, particularly in Florida and California. Fitch is currently seeking input on the new methodology and no date has been set regarding when it goes into effect.
 
"Over the last couple years, RMBS investors are increasingly focused on natural disaster risk. And we felt it would be helpful to try to quantify that for them," said Grant Bailey, an analyst at Fitch. "Our current proposed adjustment is fairly modest. But our goal here was to develop a framework that would allow us to dial the adjustment as needed."
 
Fitch would become the first ratings agency to factor climate risk into its RMBS assessments. In January, the company launched an integrated scoring system that shows how environmental, social and governance (ESG) factors impact individual credit rating decisions. Fitch introduced its ESG Relevance Scores across all asset classes, starting with over 1,500 non-financial corporate ratings, with plans to add banks, nonbank financial institutions, insurance, sovereigns, public finance, global infrastructure and structured finance to this scoring system.

 
About the author
Published
Jun 06, 2019
The Fed Held. The Mortgage Market Got A Warning.

Three policymakers favored an immediate hike, while Warsh welcomed higher bond yields and offered no clear path toward mortgage-rate relief

Jul 30, 2026
New Study Finds UWM's 'All-In' Triggered Industrywide Pricing Spillovers

Research shows wholesale competitors responded to the 2021 Rocket ban by lowering mortgage rates,

Jul 15, 2026
First Major Housing Reform In Decades Becomes Law Without Trump's Signature

Bipartisan ROAD to Housing Act advances supply, construction, and mortgage reforms despite White House protest

Jul 10, 2026
Mortgage Star Conference Honors Women Shaping The Future Of Mortgage Leadership

MWLC honors leaders driving innovation, mentorship, and growth across the mortgage industry

Jul 09, 2026
June Jobs Report Improves Mortgage Rate Outlook

Slower hiring strengthens bonds and eases concerns over additional Fed tightening

Jul 02, 2026
NEXA Founder Mike Kortas Launches evoLend To Help Originators Retain Borrowers

New Fannie Mae-, Freddie Mac- and Ginnie Mae-approved mortgage servicer aims to keep originators connected to borrowers through servicing data, payoff visibility and retention tools

Jul 02, 2026