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Friday, March 29, 2013

FHFA Publishes Proposed Lender-Placed Rule Limiting Compensation

Included in today's Federal Register was a request for public input on FHFA's lender-placed insurance proposal to prohibit certain compensation paid to servicers by carriers.

In an effort to keep lender-placed insurance costs to the GSEs as low as possible, the FHFA is considering banning two specific practices:
  • Certain Sales Commissions: The GSEs must “prohibit sellers and servicers from receiving, directly or indirectly, remuneration associated with placing coverage with or maintaining placement with particular insurance providers.”
  • Certain Reinsurance Activities: The GSEs must “prohibit sellers and servicers from receiving, directly or indirectly, remuneration associated with an insurance provider ceding premiums to a reinsurer that is owned by, affiliated with or controlled by the sellers or servicers.”
Comments are due May 28. ABIA will comment.

Read the Notice in the Federal Register.