New rules have been put in place for Fannie Mae and Freddie Mac mortgages intended to help cut home insurance bills for million of American families, especially in condos and rural area.
The GSAs said the changes fix expensive Biden-era requirements with simple, common-sense updates that respond to today’s skyrocketing insurance prices.
“Thanks to President Trump’s landslide victory, we are replacing a disruptive and expensive Biden insurance mandate with commonsense policies for today’s market,” FHFA Director William J. Pulte said. “Lower insurance costs and mortgage rates shrink the monthly payment of a new mortgage, giving new homebuyers confidence that they can afford the American dream.”
The complicated “maximum per-unit deductible” rule has been simplified, the agencies said. And now, many condo buildings that were getting priced out of the mortgage market will qualify again.
Also, the agencies are scrapping an unnecessary “clarification” from 2024 that would have slowed down insurance claims and driven up costs for no good reason, they said.
Now Will Accept ACV Coverage
Fannie and Freddie said they now will accept Actual Cash Value (ACV) coverage on roofs for single-family homes and condos. ACV pays what your roof is actually worth today.
“Imposing higher costs on families and limiting consumer choice was another outrageous example of big government overreach by the Biden Administration. I’m grateful to the Trump Administration and Federal Housing Director Pulte for working with me to repeal this harmful mandate, giving families the flexibility they need and ensuring rural communities have better access to choose an insurance plan that best reflects their needs,” U.S. Sen. Eric Schmitt. R-Missouri, said.
The agencies said the the house still gets full Replacement Cost Value (RCV) protection. That means it will be rebuilt brand-new if disaster hits.
This fixes a real problem, the GSAs said, because full replacement roof coverage has become very expensive and hard to find in many states.
In a statement, the Community Home Lenders of America (CHLA) commended the move.
“CHLA commends Fannie Mae and Freddie Mac for taking actions CHLA has been calling for to create more flexible replacement cost and deductible insurance requirements for condominiums,” CHLA said. “And while CHLA appreciates the increased exemption threshold up to 10 units for limited reviews, CHLA does have concerns about ending this important option for condos more broadly. We urge Fannie and Freddie to explore ways to achieve its objectives on this issue in a less burdensome manner.”
