The Federal Housing Finance Agency rejected a plan to cut premiums for replacement homeowners insurance, the agency announced during a conference call. 

The FHFA is the regulatory overseer of both Fannie Mae and Freddie Mac. This decision to cut premiums for replacement homeowners’ insurance may prevent Fannie Mae from its goal of acquiring low-cost fore-placed insurance from its own vendors as well as preventing banks from collecting payments for steering business to force-placed carriers.

“This is a responsible and measured approach to put policy in place that is beneficial for both GSEs, consumers, and the industry at large,” said Meg Burns, the senior associate director of the FHFA’s office of housing and regulatory policy.

Rather than permit Fannie to buy force-placed insurance from a consortium of low-cost insurers, the FHFA will form a study group to further review the force-placed insurance market and its costs to Fannie Mae.