Updated GSE Guidance Removes a Barrier to Home Affordability

The National Association of Mutual Insurance Companies said today that a change in guidance from the government sponsored enterprises Fannie Mae and Freddie Mac long sought by mutual insurers will help ease the costs of homeownership.

“The dream of homeownership is a little more attainable with the end of this needless and burdensome coverage mandate,” said Neil Alldredge, president and CEO of NAMIC. “Giving consumers more options to fit their needs and budgets will bring with it greater competition in the marketplace and help bring costs down.”

Announced March 11, following more than two years of deliberations, the GSEs will no longer prohibit homeowners insurance policies that settle roof claims at actual cash value. The original change — made in February 2024 without stakeholder input or a formal rulemaking process — required properties with a federally backed mortgage to have full replacement cost value homeowners insurance, the highest level of coverage. Such coverage comes at a higher cost, and the guidance change worked as a de facto regulation barring other, more affordable, state-regulated insurance products that factor in depreciation.

“Limiting consumers to only the most expensive coverage just made buying a home that much more difficult, and created real harm for the homeowners market,” Alldredge said. “The vast majority of mortgages are backed by the GSEs, and so keeping costs needlessly high probably prevented some consumers from becoming homebuyers.”

NAMIC originally raised its objections when the change was made under the Biden administration and was able to win a pause in enforcement in May 2024. Mortgage lenders in marketplaces nationwide, however, continued to reference the Biden-era guidance change while denying consumers and would-be homebuyers alternative options. Since President Trump returned to office and appointed Federal Housing Finance Agency Director Bill Pulte, the association has repeatedly pointed to the coverage mandate as a barrier to homeownership and affordability. Dozens of members of Congress, led by Reps. Mike Flood, R-Neb., and Addison McDowell, R-N.C., as well as Sen. Eric Schmitt, R-Mo., also voiced concern with the mandate, citing the financial burden of limiting consumer choice and the barrier it created to home affordability.

“Consumer choice is key to affordability,” said Jimi Grande, senior vice president of federal and political affairs at NAMIC. “Director Pulte’s bold leadership and decisive action is restoring affordability for millions of families nationwide. NAMIC is grateful for his attention and efforts on this issue and looks forward to working with him and the administration to continue reducing risks and cost for homeowners, which will in turn reduce the costs of insuring homes.”