Solving the Post-Close Challenge with Intelligent Automation

Join our upcoming webinar as SoftWorks AI CEO and Avanze CEO explore the advances in tech that allow for greater levels of automation and cost reduction, especially in support of post-close and pre-fund review.

Spruce’s Patrick Burns on innovation in title technology

In the season finale of Housing News season 5, Spruce CEO discusses heightened investor interest in title tech, innovation and fintech adoption.

The 100-years-war over real estate commissions

HousingWire plunges down the rabbit hole of residential real estate commissions, uncovering the past, present and future of this wholly unique part of the economy.

How borrower education can make housing more attainable

The current housing market is making it difficult for prospective buyers to afford a home. Housing professionals need to find ways to better meet buyer needs.


FHFA directs GSEs to restrict force-placed insurance practices

Limitation of practices may squeeze lenders, taxpayers

Mortgage giants are prohibiting servicers from being reimbursed for expenses associated with captive reinsurance arrangements. 

The Federal Housing Finance Agency announced Tuesday that it has directed Fannie Mae and Freddie Mac to restrict forced-placed insurance practices, which is a follow up from a notice the agency published in March regarding its views on such practices.

The notice cited concerns that the practices expose the government-sponsored enterprises to potential losses as well as litigation and reputation risks.

“One of our primary responsibilities as conservator of Fannie Mae and Freddie Mac is to preserve and conserve their assets on behalf of taxpayers,” stated FHFA current acting director Ed DeMarco.

He added, “This directive is intended to reduce their costs as we consider additional measures.”

FHFA established a regulatory working group consisting of federal and state agencies to ensure that all parties with an interest and role in the subject of force-placed insurance are engaged in all discussions.

The FHFA’s actions to restrict such practices are a direct result of the views of the entities in the working groups and more than 30 replies from consumer advocates in response to the notice.

The GSEs will provided aligned guidance to sellers and servicers to prohibit these practices, including implementation schedules.

Some industry experts believe this decision by the FHFA will ultimately be a more process-driven issue.

“It doesn’t change the requirement for insurance, but changes how lenders handle situations where it is lacking,” explained Cato Institute financial regulation studies director Mark Calabria.

He added, “Ultimately, anything force-placed will have to be priced in a manner that reflects what the borrower could have found on their own, so that will squeeze lenders fees somewhat.”

Additionally, the restriction in force-placed insurance could also hit taxpayers if there’s a lapse in insurance and the enterprises hold the loan, Calabria concluded.

Most Popular Articles

Fannie and Freddie set dates for their new refi option

Fannie and Freddie revealed new dates for their refi options targeted to low-income borrowers set to be available this summer.

May 05, 2021 By

Latest Articles

What a dismal jobs report means for the housing market

April’s U.S. jobs report on Friday was dismal at just 266,000 new jobs, but economists say they’re not worried about the housing or mortgage market. HW+ Premium Content

May 07, 2021 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please