The Federal Housing Finance Agency (FHFA) announced its successful revision of the mortgage insurance master policy guiding Fannie Maeand Freddie Mac mortgages.
The agency’s 2013 Conservatorship Scorecard called for an aligned master policy for Fannie Mae and Freddie Mac in order to provide the properframework for insurers and all parties tied to the transaction.
"The new standards update and clarify the responsibilities of insurers, originators and servicers, and they enhance the insurance protection provided to Fannie Mae and Freddie Mac, which ultimately benefits taxpayers," said FHFA Acting Director Ed DeMarco.
Key changes in the master policy include the implementation of various loss-mitigation strategies developed during the housing crisis to help troubled homeowners.
In addition, it establishes specific timeframes for processing claims, including requests for additional documentation.
The revisions also include standards for determining when, and under what circumstances, coverage under the mortgage insurance policy must be maintained and when it may be revoked.
The revised version is supposed to help increase communication and information sharing between insurers, servicers and Fannie Mae and Freddie Mac.
"These updates will help us better manage our credit risk, which we believe will ultimately benefit Fannie Mae, mortgage insurers, homeowners and taxpayers," said Andrew Bon Salle, executive vice president of single-family underwriting, pricing and capital markets at Fannie Mae.
Additionally, Paige Wisdom, executive vice president and chief enterprise risk officer at Freddie Mac, noted that the GSE looks forward to working with servicers and mortgage insurers as they adopt the new master policy.
"Mortgage insurers are an important part of the mortgage finance system and these changes help lay the foundation for a stronger system going forward," Wisdom said.
“By establishing consistent industry practices and timelines pertaining to premium collection, servicing, claim submission, loss mitigation activities, and servicer reporting, the new master policy requirements ensure that all stakeholders will have greater clarity regarding mortgage insurance coverage and servicing processes” a company spokesperson for Genworth MI said.