The agency is seeking input on new requirements that would apply to private mortgage insurers that are currently approved to do business with Fannie or Freddie, and those seeking approval in the future. The proposed requirements would help ensure that approved ensurers hold sufficient capital to pay claims, the FHFA said.
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. "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."
The draft requirements also include enhanced operational performance expectations for insurers and set out remedial actions should an insurer fail to comply with the new requirements. FHFA is requesting input by September 8, 2014.
The FHFA has called for public input on draft requirements to tighten rules around private mortgage insurance companies that deal with Fannie Mae and Freddie Mac.