FANNIE MAE AND FREDDIE MAC ISSUE NEW LENDER-PLACED INSURANCE RESTRICTIONS PROHIBITING ARRANGEMENTS WITH AFFILIATED CAPTIVE INSURERS AND REINSURERS
On December 18, 2013, Fannie Mae and Freddie Mac issued notices announcing updated requirements for lender-placed insurance (“LPI”) for all Fannie and Freddie mortgage loans. Included in the update is a new requirement that a loan servicer’s LPI carrier must not be an “affiliated entity,” including affiliated captive insurers and reinsurers. A new certification will be required for the servicers to certify that they comply with Fannie’s and Freddie’s requirements for acceptable LPI insurance carriers. Fannie and Freddie also will require servicers, upon request, to provide copies of their LPI policies, including any contractual arrangements with servicers and LPI carriers. The servicers will also be required to respond to periodic requests for data. Copies of Fannie’s Servicing Guide Announcement SVC-2013-27 and Freddie’s 2013-27 Bulletin, can be accessed here.
This post written by Michael Wolgin.
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