The Federal Housing Finance Agency announced on Monday that Fannie Mae and Freddie Mac completed the revision of mortgage insurance master policy requirements.
The FHFA’s 2013 Conservatorship Scorecard recommended that Fannie and Freddie develop aligned master policy requirements. The mortgage giants have since worked with the FHFA to update gaps in current framework to ensure timely and consistent claims processing.
“Updating the mortgage insurance master policy requirements is a significant accomplishment for Fannie Mae and Freddie Mac,” FHFA Acting Director Ed DeMarco said. “The new standards update and clarify the responsibilities of insurers, originators and servicers, and they enhance the insurance protection provided to [Fannie and Freddie], which ultimately benefit taxpayers.”
Mortgage insurance master policies outline the terms of business between mortgage insurers and seller-servicers. Insurers will incorporate the aligned requirements into master policies to be filed with state regulators for review and approval, Housing Wire reports.
Key changes include the implementation of loss-mitigation strategies developed during the housing crisis to assist troubled homeowners, as well as timeframes for claims processing and requests for additional documentation.
“These updates will help us better manage our credit risk, which we believe will ultimately benefit Fannie Mae, mortgage insurers, homeowners and taxpayers,” Andrew Bon Salle, the executive vice president of single-family underwriting, pricing and capital markets at Fannie, said, according to Housing Wire.
Over the next several weeks, Fannie and Freddie will provide additional guidance to lenders and servicers regarding the effective date.