Through this ongoing effort, Fannie Mae and Freddie Mac, with FHFA oversight, have worked with the mortgage insurance industry to address and update gaps in the existing master policy framework. The new requirements will, among other things, facilitate timely and consistent claims processing.
Key improvements include:
- Loss mitigation – requires that master policies support various loss mitigation strategies that were developed during the housing crisis to help troubled homeowners.
- Claims – establishes specific timeframes for processing claims, including requests for
- Assurance of coverage – sets standards for determining when, and under what circumstances, coverage under the mortgage insurance policy must be maintained and when it may be revoked. Enhanced communication – promotes information sharing among mortgage insurers, servicers and Fannie Mae and Freddie Mac.
Mortgage insurance master policies specify the terms of business interaction between seller-servicers and mortgage insurers. Mortgage insurers will incorporate the aligned requirements into new master policies, which will be filed with state insurance regulators for their review and approval. FHFA, Fannie Mae and Freddie Mac anticipate that the master policies will go into effect in 2014, pending review and approval by state insurance regulators. In the coming weeks, Fannie Mae and Freddie Mac will provide guidance to lenders and servicers regarding specific effective dates.