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FHFA, GSEs Overhaul Mortgage Insurance Master Policy

Moving forward on another of its performance goals for 2013, the ""Federal Housing Finance Agency"":http://www.fhfa.gov/ (FHFA) announced Monday that ""Fannie Mae"":http://www.fanniemae.com/portal/index.html and ""Freddie Mac"":http://www.freddiemac.com/ have completed a major overhaul of mortgage insurance master policy requirements.


Earlier in the year, FHFA laid out its ""2013 Conservatorship Scorecard"":http://www.fhfa.gov/webfiles/25023/2013EnterpriseScorecard3413.pdf, which--among other things--calls for the GSEs to develop aligned requirements for master policies. Through an ongoing effort, FHFA says both enterprises have worked with the mortgage insurance industry ""to address and update gaps in the existing master policy framework.""

""Updating the mortgage insurance master policy requirements is a significant accomplishment for Fannie Mae and Freddie Mac,"" said FHFA acting director Ed DeMarco. ""The new standards update and clarify the responsibilities of insurers, originators and servicers and they enhance the insurance protection provided to Fannie Mae and Freddie Mac, which ultimately benefits taxpayers.""

The ""new requirements"":http://www.fhfa.gov/webfiles/25856/MIpolicy120213F.pdf include a number of provisions intended to facilitate faster and more consistent claims processing, establishing specific timeframes and creating standards for the circumstances under which coverage must be maintained and when it may be revoked.

Also included are requirements for master policies to support recently developed loss mitigation strategies and guidelines to promote information sharing among mortgage insurers, servicers, and the GSEs.

FHFA anticipates the master policies will go into effect in 2014 pending review and approval by state insurance regulators. Both enterprises will provide guidance to lenders and servicers in the coming weeks regarding specific effective dates.

For their parts, Fannie Mae and Freddie Mac both put their support behind the new master policies.

""The updated master policy for mortgage insurance announced today builds on the market reforms of the past five years, and we were happy to work with FHFA to bring about this latest step toward greater operational efficiency and transparency in the mortgage market,"" said Paige Wisdom, EVP and chief enterprise risk officer at Freddie Mac. ""We look forward to working with our servicers and the nation's mortgage insurers as they adopt the new master policy.""

""Mortgage insurers are an important part of the mortgage finance system and these changes help lay the foundation for a stronger system going forward,"" added Andrew Bon Salle, EVP of single-family underwriting, pricing, and capital markets at Fannie Mae. ""These updates will help us better manage our credit risk, which we believe will ultimately benefit Fannie Mae, mortgage insurers, homeowners and taxpayers.""


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