Hey everybody it's Amy and this is a very special episode of how we survive devoted to you

our listeners we've been getting some really smart interesting questions

about money,

about money, specifically the money that keeps people living and building in risky coastal areas.

Brian here from Lakewood, Colorado. I just got done listening to season 2 episode 1

and I literally found myself yelling at my computer monitor about who the

hell loans these people money for their mortgages.

I suppose there's some sort of elaborate system in place that insulates mortgage companies from these

risks but that'd be a fun one to untangle but hey maybe you'd like to prove you're

the best hazard podcast on the internet and explain this one to the masses.

Okay we love us on the internet and explain this one to the masses.

Okay, we love a challenge.

To help us answer this question, I called up one of my go-to sources on housing finance.

His name is Ben Keys, and he's a professor of real estate

and finance at the Wharton School. Here's the short answer. So banks continue to

lend in risky markets in large part because they're not

bearing those risks directly they're passing those risks on through Fannie Mae

and Freddie Mac to the federal government who ensures the loans.

So yes Brian there is an elaborate system in place that insulates mortgage companies from these risks.

Basically when banks and other lenders make loans to homeowners, they don't typically hold on to those loans.

These days, about half of mortgages end up being sold to one of two big government-backed entities,

Fannie Mae and Freddie Mac so that lenders can

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