Almost a year after Hurricane Sandy ravaged the New York/New Jersey coastline, one question that is difficult for the mortgage industry to answer is what would the default rate be if a hurricane with the same type of impact made landfall?

However, one type of risk that traditionally has not been directly managed but rather insured against by the borrower is natural hazard risk. Right now, we know very little systematically about the level to which mortgage portfolios are exposed to natural hazard risk.

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