FHFA’s announcement follows onernin March when FHFA published its views on lender-placed insurance policies inrnthe Federal Register and opened a period of public comment.  Among other issues the notice cited concernsrnthat current insurance agency and servicer practices could expose the GSEs tornpotential losses as well as litigation and reputation risks.</p

Before placing that notice FHFA,rnin a move strongly criticized by many consumer advocates, had instructed FanniernMae to drop a program in which it would purchase FPI directly from a consortiumrnof insurance companies at an estimated 40% discount from the prices beingrncharged by QBE and Assurant which have written virtually all such coverage overrnthe past few years.  FHFA said it neededrnto take a more “measured approach” and that any narrowly focusedrnapproach that would contain costs for the GSEs would do little to address thernneeds of a future market when the two no longer existed.</p

In addition to inviting public comment on the issue FHFA established a Regulatory Working Group consisting of both state and federal regulators to involve FPI stakeholders inrnthe discussions.  FHFA said the views ofrnthe working group were considered along with more than 30 comments fromrnconsumer advocates, state regulators, servicers, and insurance carriers. </p

“FHFA remains concernedrnabout the cost of lender-placed insurance for Fannie Mae,rnFreddie Mac, and consumers,”rnsaid FHFA Acting Director Edward J. DeMarco.rn”One of our primary responsibilitiesrnasrnconservator of FanniernMae and FreddiernMac is to preservernand conserve their assets onrnbehalf of taxpayers.rnThis directive is intended to reduce their costsrnas we consider additionalrnmeasures.”

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