The National Association of Mutual Insurance Companies (NAMIC) has called on the Federal Housing Finance Agency (FHFA) to withdraw a coverage mandate imposed by Fannie Mae and Freddie Mac, following opposition from both chambers of Congress.
Jimi Grande, senior vice president of federal and political affairs for NAMIC, stated, “America’s mutual insurance companies want to offer consumers as many coverage options as possible to provide financial protection and peace of mind that meets their needs and their budget. The coverage requirement imposed by Fannie Mae and Freddie Mac takes away those choices and puts the dream of homeownership that much further out of reach for many Americans.”
In February 2024, Fannie Mae and Freddie Mac updated their selling and servicing guidance to require full-replacement-cost insurance. This type of insurance is typically more expensive than alternatives such as actual cash value coverage, which accounts for depreciation and offers lower premiums. Although the FHFA agreed in May 2024 to pause enforcement after pushback from NAMIC, lawmakers, and other stakeholders, mortgage lenders continue to cite the guidance when denying alternative insurance options to consumers.
Senator Eric Schmitt of Missouri sent a letter—co-signed by 18 other senators—to FHFA director William Pulte urging rescission of the mandate. A similar letter was sent on November 6 by Representative Addison McDowell of North Carolina with support from nearly 50 representatives.
Grande added, “Both the House and Senate have made it clear that, at a time when interest rates, construction materials, and labor costs remain stubbornly high, the GSEs should not be forcing added costs into homeownership. Congress has made its view on this issue crystal clear, and we urge the FHFA to respond by swiftly requiring the GSEs to rescind this costly and excessive mandate.”
