NAMIC Urges FHFA to Rescind Coverage Requirement as 19 US Senators Voice Their Objections

Congress has made it clear that the Federal Housing Finance Agency should require Fannie Mae and Freddie Mac to rescind a costly and excessive coverage mandate, the National Association of Mutual Insurance Companies said today, as a group of senators joined their House colleagues in denouncing the requirement.

“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,” said Jimi Grande, senior vice president of federal and political affairs for NAMIC. “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.”

Federal government-sponsored entities Fannie Mae and Freddie Mac, which are supervised by the FHFA, unilaterally updated their selling and servicing guidance in February 2024 to explicitly require full-replacement-cost insurance, which is often the most expensive coverage. Following opposition from NAMIC, lawmakers, and other stakeholders, the agency agreed to pause enforcement of the requirement in May 2024. However, mortgage lenders in marketplaces nationwide continue to reference the Biden-era guidance change while denying consumers and would-be homebuyers alternative options, such as actual cash value coverage, which considers depreciation for reduced premiums.

Sen. Eric Schmitt, R-Mo., sent a letter to FHFA director William Pulte co-signed by 18 other senators urging FHFA to rescind the mandate. Rep. Addison McDowell, R-N.C., sent a similar letter Nov. 6 with nearly 50 of his fellow representatives.

“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,” Grande said. “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.”