The Federal Housing Finance Agency has issued a press release to announce "that it has directed Fannie Mae and Freddie Mac to prohibit [mortgage] servicers from being reimbursed for expenses associated with captive reinsurance arrangements." FHFA News Release, "FHFA Directs Fannie Mae and Freddie Mac to Restrict Lender-Placed Insurance Practices," November 5, 2013. Download FHFA.LPI_news_release_110513. In its release, the FHFA also noted that Fannie Mae and Freddie Mac will together provide "aligned guidance" on an unspecified future date "to sellers and servicers to prohibit these practices, including implementation schedules."
What this means, for now, is that Fannie Mae and Freddie Mac will in the future stop using Federal public funds to pay for expenses submitted by mortgage servicers for payment, when those expenses are "associated with captive reinsurance arrangements" on mortgages owned by Fannie Mae or Freddie Mac.
The date for implementation of this directive is unknown. It is to be hoped that this new procedure will be implemented soon. Another opportunity for hope is presented by the types of expenses submitted by mortgage servicers to Fannie and Freddie which are apparently going to continue to be reimbursed with funds taken from the Federal Treasury, principally so-called "commissions". The FHFA should now turn its attention to those sorts of so-called "expenses," at least to the extent of FHFA's jurisdiction over the matter which is to the extent of expenses submitted by mortgage servicers to Fannie and Freddie Mae for payment with public funds.
In researching this article, I could not find any other source for this "directive" than the FHFA press release. There is nothing else I could find about it on the FHFA website, nor could I find any new rule or regulation. Further, the news reports citing to this development all so far refer only to the same FHFA press release, reflecting that they too have not found or been provided with any other source of this information. If any of my readers know of any other source of this FHFA directive to Fannie and Freddie, I would gratefully appreciate knowing, and thanks in advance to anyone who cares to share it.
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