Skip Ribbon Commands
Skip to main content
May 09
Big ‘I’ Praises Fannie Mae, Freddie Mac for Postponing Guidance for Property Insurance Requirements

thumbnail_image001.jpg

On Wednesday, Fannie and Freddie announced that the June 1 implementation of this updated guidance is being postponed indefinitely. 

The Big “I” was the only agent trade association to weigh in on this issue with the Federal Housing Finance Agency (FHFA) and GSEs.​

While this is definitely a win, according to Nathan Riedel of Big "I" Government Affairs, it is also a stark reminder that government bureaucrats can put pen to paper on issues that they don’t truly understand, and we must remain vigilant, monitoring their activity and staying in front of them to the best of our ability.

View Notice from Fannie Mae

View Notice from Freddie Mac

-----------------------------------------------------------------------------------

Below is the official press release from the Big "I": 

Big ‘I’ Praises Fannie Mae, Freddie Mac for Postponing Guidance for Property Insurance Requirements​

The guideline would explicitly deem actual cash value coverage to be unacceptable, require replacement cost coverage.
 

WASHINGTON, D.C., May 9, 2024— On Wednesday, Fannie Mae and Freddie Mac announced the postponement of a June 1 implementation of updates to their selling and servicing guides to clarify various lender and servicer responsibilities related to monitoring and verifying property insurance coverage.

Among other things, the updated guidance—which was directed by the Federal Housing Finance Agency (FHFA) earlier this year—would require homeowners to obtain replacement cost value (RCV) coverage for all aspects of their homes and explicitly states that actual cash value (ACV) coverage is unacceptable. Importantly, this mandate includes roofs, even though lenders and servicers in the vast majority of states have long accepted the use of ACV for roofs.

The U.S. property insurance market is experiencing a multitude of challenges with many homeowners facing significant availability or affordability issues. If implemented, this guidance would have a real-world impact on the many homeowners who are unable to satisfy the coverage requirements or who are forced to purchase a higher-cost insurance product to do so. Obtaining adequate coverage for roofs in particular is difficult in the current hard market and this would further complicate that problem.

“We are hearing regularly from independent agents throughout the country on the challenges they face finding sufficient and affordable property insurance coverage for their customers, particularly for roofs,” says Charles Symington, Big “I” president & CEO. “The property insurance market is under significant stress already and this updated guidance would have only exacerbated that.”

The Big “I” was the only agent trade association to weigh in on this issue with the FHFA and government-sponsored enterprises (GSEs), communicating with each and submitting a joint letter with the National Association of Mutual Insurance Companies stating that the guidance would worsen existing challenges in the property insurance market.

“The Big ‘I’ is thankful for the postponement of this guidance, recognizing the potential burden it could place on consumers and the economy during this hard market,” says Nathan Riedel, Big “I” senior vice president for federal affairs. “We look forward to working with FHFA, Fannie Mae and Freddie Mac, and other stakeholders on these property insurance requirements.”​​​​

Comments

There are no comments for this post.