Fannie, Freddie Ordered To Limit Force-Placed Insurance

Law360, New York (November 5, 2013, 4:03 PM EST) -- The federal regulator overseeing Fannie Mae and Freddie Mac on Tuesday directed the mortgage giants to stop reimbursing mortgage servicers for costs they incur through captive reinsurance agreements that consumer advocates say raise costs for borrowers.

The action from the Federal Housing Finance Agency caps a process that began in March when the agency opened up a review of reimbursements for so-called force-placed insurance schemes, which essentially sees banks recover any costs generated by insuring mortgages when borrowers do not purchase their own policies.

Critics of...
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