Scotsman Guide – Victor Whitman
The Federal Housing Finance Agency (FHFA) has unveiled its proposed rules for private insurance companies seeking to insure loans owned by Fannie Mae and Freddie Mae, ratcheting up eligibility requirements and adding a uniform standard that is currently nonexistent.
The proposed guidelines would impose financial requirements so insurers can cover the loans in economic downturns and also beef up their internal risk control with more robust documentation and management oversight, according to the FHFA.
"Mortgage insurance counterparties must be able to fulfill their intended role of providing private capital, even in adverse market conditions," said FHFA Director Mel Watt in a news release. "FHFA’s Strategic Plan calls on Fannie Mae and Freddie Mac to strengthen the requirements for private mortgage insurance companies that do business with them in order to reduce Fannie Mae’s and Freddie Mac’s overall risk exposure and protect taxpayers."
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