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Thursday, February 14, 2013

FHFA Rejects Fannie’s Force-Placed Insurance Plan

The Federal Housing Finance Agency this week rejected a Fannie Mae plan to require mortgage-servicers to use a Fannie-approved consortium of insurers that would have purportedly provided significant premium discounts.

In place of the plan, the FHFA asked Fannie to work with Freddie Mac and a group of mortgage industry trade associations to study force-placed insurance costs further.

ABIA and ABA in a Jan. 2 joint letter expressed concern about the lack of transparency and the absence of public input on Fannie’s initiative

The trade groups said that, if adopted, the plan would effectively allow Fannie 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.

Read the letter.