WASHINGTON (4/21/15)--Fannie Mae and Freddie Mac have issued revised requirements for private mortgage insurance companies insuring mortgages either owned or backed by Fannie or Freddie. These requirements are effective Dec. 31.
The revised rules include financial requirements designed to ensure that approved insurers can meet obligations during times of economic stress. There are several options for approved insurers to meet these requirements, which include raising capital, entering into reinsurance contracts and replacing illiquid assets with liquid assets.
Both Fannie and Freddie have posted the new requirements online, along with frequently asked questions documents.
The Federal Housing Finance Agency, operating as conservator for Fannie and Freddie, directed the two enterprises to align and strengthen their risk management requirements for mortgage insurance counterparties.
The agency solicited input from a number of stakeholders, including state insurance commissioners, private mortgage insurers, consumer advocates and seller/servicers, between July and September 2014 to create the new guidelines.