The Real Stranded Assets of Carbon Lock-in: A Future Without Mortgages?

Federal Reserve Chair Jerome Powell just confirmed what many Californians already fear:?in a decade, entire regions could become unmortgageable?due to climate-driven insurance losses.

“Fast-forward 10 or 15 years… there are going to be regions of the country where you can’t get a mortgage. They won’t have ATMs, … the banks won’t have branches.” – Jerome Powell, Senate Banking Committee

This warning has begun playing out in Los Angeles. After repeated wildfires,?homeowners are receiving non-renewal notices from insurers, forcing them to choose between expensive state-backed policies or going without insurance entirely.

For many, the only option is the?Fair Access to Insurance Requirements (FAIR) Plan, a state-run insurer of last resort. But these policies offer?less coverage and significantly higher premiums, pricing many homeowners out of the market. Some have decided to “go bare”—a term for homeowners who drop insurance altogether. While this can free up thousands of dollars over time, it comes with enormous risk: a single wildfire or flood could wipe out a homeowner’s entire financial security overnight.

For those who want a mortgage, going without insurance isn’t an option.?Mortgage lenders require coverage as a condition of their loans, meaning that an uninsured home is effectively unsellable. That is, it becomes a stranded asset. If insurers continue to withdraw from high-risk areas, entire neighborhoods could become?financially stranded, with plummeting property values and no access to credit or refinancing. The consequences won’t stop at individual homeowners—local economies, tax bases, and municipal services depend on a stable housing market. Something as simple as access to insurance could turn entire communities into stranded assets.

And it’s not just mortgages. Powell’s warning goes further:?entire financial services sectors could vanish?from these high-risk regions, leading to what we might call a?“Financial Services Desert.”?Without insurance, mortgages, or even basic banking infrastructure like ATMs and local branches, communities could find themselves in a?“Capital Blackout Zone”—effectively cut off from the modern financial system.

Historically,?redlining?was the racist practice of systematically denying mortgages and financial services to minority neighborhoods, preventing homeownership and wealth accumulation. Today, a new form is emerging:?Mortgage Redlining 2.0, where climate risk, rather than race, dictates which communities financial institutions abandon. The effect is eerily similar—entire neighborhoods stripped of access to loans, declining property values, and growing economic disparity.

Powell’s warning isn’t theoretical—it’s already begun. The housing market in disaster-prone areas is fraying at the edges, and unless the trend is reversed,?we may soon see the first modern U.S. cities where homeownership is no longer financially viable, and entire regions are left behind in a financial void.

#StrandedAssets #ClimateRisk #HousingCrisis #FinancialServicesDesert #CapitalBlackoutZone #MortgageRedline2.0 #CarbonLockIn