WASHINGTON Nov 5 A U.S. housing regulator said
on Tuesday that it would ban some fees and commissions that
borrowers are compelled to pay when their own home insurance
The Federal Housing Finance Agency said it was aiming to
shield homeowners from price-gouging on property coverage. The
regulator, which oversees mortgage finance companies Fannie Mae
and Freddie Mac, said the restrictions on
the fees banks collect from insurers on so-called force-placed
insurance would probably reduce costs for consumers.
All mortgages require homeowners to maintain insurance on
their property. Most mortgages also allow the lender to purchase
insurance for the home and force-place it if a policy lapses or
borrowers stop paying their insurance bills.
Forced-placed policies were widespread during the recession,
when delinquencies swelled and homeowners effectively stopped
paying their insurance since premiums are often included in
monthly mortgage payments.
Fannie Mae and Freddie Mac, which provide the financing for
about two-thirds of all new U.S. home loans, are often exposed
to potential losses due to costs for unpaid insurance fees, the
"This directive is intended to reduce their costs as we
consider additional measures," FHFA Acting Director Edward
DeMarco said in a statement.
The industry has voiced objections to the move by the FHFA,
with some groups saying state regulators have already pressed
insurers to cut premiums on force-placed policies after
complaints surfaced that they possibly charge too much.
Fannie Mae and Freddie Mac will provide guidance to sellers
and servicers on the fee system, including implementation
schedules, the regulator said.