LPI Reformer Supports FHFA Proposals, But Wants More

A participant in past attempts to reform Fannie Mae’s lender-placed insurance practices has officially supported more recent proposals by its regulator, but also has renewed its call for more competition and change to compensation beyond those proposals that is more in line with its previous suggestions.

“Ending inappropriate commissions and reinsurance arrangements and reinsurance arrangements alone will not produce the market pressures necessary to increase the flow of information within the market, lower barriers to entry and put downward pressure on premiums,” said Tracey Carragher, CEO of Breckenridge Insurance Group, in a press release.

“We believe the solution for the LPI industry includes increased competition, greater transparency and allowing the GSEs to exercise control over their own portfolios.”

Breckenridge Insurance Group, parent company of lender-placed insurer OSC, submitted the comments to meet the Federal Housing Finance Agency’s deadline Tuesday for feedback on more recent “early action” practices proposed by Fannie’s regulator in March. These include a ban on certain commissions.

The FHFA said in a notice published in the Federal Register in March that while it is planning “a broader review of issues relating to the market for lender-placed insurance,” there also are some separate moves it could make that “are considered sufficiently distinct as to merit early action.”

In February, the FHFA blocked an earlier Fannie Mae effort to reform LPI, indicating it was seeking a “responsible and measured approach to put policy in place that is beneficial for both GSEs, consumers and the industry at large.”

OSC/Breckenridge maintains its original plan has several broad benefits, including providing cost savings directly to taxpayers and homeowners, as well as Fannie Mae. The Fannie proposal also would be scalable to Freddie Mac, according to the company. In addition, OSC/Breckenridge said its original plan is considerate of the industry in that it “requires no changes to existing tracking relationships among the servicing community, while also offering multiple support alternatives to meet individual servicer needs.”