The ""National Association of Federal Credit Unions"":http://www.nafcu.org/default.aspx (NAFCU) offered a comment letter Tuesday addressing the ""Federal Housing Finance Agency's"":http://www.fhfa.gov/ (FHFA) proposed restrictions on lender-placed insurance practices.
[IMAGE]The agency first brought up ideas for new restrictions in March. Under its proposals, the GSEs would prohibit sellers and servicers from receiving pay--directly or indirectly--associated with placing coverage with or maintaining [COLUMN_BREAK]
placement with particular insurance providers. In addition, the enterprises would prohibit sellers and servicers from receiving remuneration associated with an insurance provider ceding premiums to a reinsurer that is owned by, affiliated with, or controlled by the seller or servicer.
In a response for the association, NAFCU senior regulatory affairs counsel Tessema Tefferi urges FHFA to scale back the discussed restrictions, which he believes are too broad.
""NAFCU urges the FHFA to study further the prohibitions it is seeking to implement to ensure that they are tailored narrowly enough to prevent abuse, but would still permit appropriate risk coverage,"" Tefferi writes. ""Lender placed insurance, as the FHFA knows, protects mortgage lenders, investors and mortage insurers. Where voluntary insurance lapses and a lender places insurance on the collateral, the Enterprises incur benefit.""
In addition, Tefferi asks the agency to ensure its policies and regulations ""are not inconsistent with recently-issued regulations on lender-placed insurance,"" citing definitions and requirements already laid out in the Real Estate Settlement Procedures Act (RESPA).