U.S. Representative Maxine Waters Questions Federal Housing Finance Agency Halting of Fannie Mae Force-Placed Insurance Cost-Reduction Plan; Requests Alternate Plan for Reform
Feb 28, 2013
In a letter to Federal Housing Finance Agency Director Edward DeMarco yesterday, February 27, 2013, U.S. Representative Maxine Waters, Ranking Member of the House Financial Services Committee (“Committee”), requested the agency’s explanation of why it halted a Fannie Mae plan this month that might have reduced the cost of force-placed insurance.
Representative Waters also asked for a listing of outside stakeholders who had informed the FHFA on its decision, as well as an outline of any FHFA plan for force-placed insurance reform in the future.
Specifically, the plan would have provided homeowners with the opportunity to purchase low-cost housing insurance from Fannie Mae’s own vendors, yielding discounts of as much as 30 to 40 percent. Its purpose was to prevent banks and other mortgage servicers from collecting payments for directing business to force-placed insurance carriers.
Representative Waters’ letter is attached in PDF format. A Committee news release is reprinted below.
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Waters Raises Questions about FHFA Decision to Stop Force-Placed Insurance Reform
WASHINGTON — Congresswoman Maxine Waters, Ranking Member of the House Financial Services Committee, today released the attached letter to Edward DeMarco, Acting Director of the Federal Housing Finance Agency (FHFA) raising questions about FHFA’s recent decision to prohibit Fannie Mae from moving forward with a plan to save taxpayers and borrowers from unnecessarily high costs related to force-placed insurance (FPI).
FPI is insurance placed on a borrower’s home when the borrower fails to maintain their own insurance policy or provide evidence of insurance as required by the loan agreement. Congresswoman Waters has long raised concerns about the cost and use of FPI through her broader advocacy for mortgage servicing reform.
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