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Friday, January 4, 2013

ABIA, ABA: Public Comment Needed on Fannie Insurance Proposal

ABIA and its parent organization the American Bankers Association (ABA) this week strongly encouraged the Federal Housing Finance Agency to request public comment on a proposed Fannie Mae initiative requiring mortgage-servicers to use a Fannie-approved consortium of insurers that would purportedly provide significant premium discounts.

“We are very concerned about the lack of transparency and the absence of public input regarding this significant initiative, particularly during this unique period of conservatorship and reshaping of the mortgage market,” ABA and ABIA said in a letter.

The trade groups noted that the proposal, if adopted, effectively would allow Fannie Mae to pick winners and losers among insurers, would be potentially inconsistent with state insurance requirements, and would dramatically alter existing servicing operations, contracts and costs.

“Such a proposed major reform of the mortgage servicing market should be considered in the sunshine,” they said. “We look forward to reviewing this proposal in detail and providing input prior to implementation.”

Read the letter.