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FHFA Proposes Force-Placed Insurance Restrictions

Posted on 3/27/2013

The Federal Housing Finance Administration (FHFA) yesterday issued a proposal that would create new restrictions on lender placed insurance by prohibiting sellers and servicers from receiving sales commissions for placing coverage or maintaining placement with particular insurance providers. The proposal also would prohibit reinsurance activities between insurers and servicer affiliates.

The proposal comes a month after the FHFA rejected a Fannie Mae plan requiring mortgage servicers to use a Fannie-approved consortium of insurers that would have purportedly provided significant premium discounts. Instead, the FHFA asked Fannie to work with Freddie Mac and a group of mortgage industry trade associations to study lender-placed insurance costs further.

The agency indicated yesterday that it also will continue with a broader review of issues related to lender-placed insurance. Comments on the proposal are due 60 days following publication in the Federal Register and final guidance from Fannie Mae and Freddie Mac is expected in September.

To read the proposal visit:

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