Fannie Mae and Freddie Mac revised their homeowner’s insurance requirements after sharply rising insurance premiums—especially for roof coverage—made full replacement cost policies difficult or impossible to obtain in many states. Many homeowners, particularly in rural or disaster-prone areas, were unable to meet the old standards, and condo buildings were hit even harder. Complex deductible rules and strict roof coverage mandates caused thousands of condo associations to lose eligibility for agency backed mortgages, effectively pricing them out of the market and preventing buyers from securing conventional financing.
At the same time, a controversial 2024 policy clarification triggered widespread criticism for slowing insurance claims, driving costs, and acting as a “de facto regulation” that restricted affordable insurance options. Industry groups, lenders, housing organizations, and more than 45 members of Congress pushed FHFA to reverse the rules, arguing they limited consumer choice and harmed mortgage access.
Rising premiums and increasing HOA fees were causing deals to fall through and leaving many buyers with unaffordable monthly payments, prompting officials to conclude that updated policies were necessary to restore access to affordable homeownership—especially for first time buyers.
Fannie Mae and Freddie Mac announced they are rolling back certain property insurance requirements for condominiums and single-family homes in response to rising insurance prices and limited options for consumers.
For more than a year, the Big “I” worked constructively with Fannie Mae and Freddie Mac to revise their property insurance requirements for federally backed mortgages. While those talks were largely positive, the government-sponsored enterprises (GSEs) had been slow to act and the need for congressional oversight steadily increased.
In November, Rep. Addison McDowell (R-NC) sent a letter to Federal Housing Finance Agency (FHFA) director William Pulte, urging the agency to revisit Fannie and Freddie guidance that requires replacement cost value (RCV) insurance for federally backed mortgages, and specifically restricts the use of actual cash value (ACV).
The Big “I” worked with Rep. McDowell’s office to gather more than 45 members of Congress to cosign the letter. This was the largest Congressional sign-on letter Pulte had received since his confirmation to the position and was a significant show of force.
Led by Sen. Eric Schmitt (R-MO), a similar effort took place in the U.S. Senate, where 19 Senators signed on. In addition to this outreach, Rep. Mike Flood (R-NE), who serves as chair of the Subcommittee on Housing and Insurance on the U.S. House Financial Services Committee, weighed in strongly with FHFA.
The pressure campaign by Congress paid dividends with FHFA directing the government-sponsored entities to make updates. Fannie Mae and Freddie Mac will now accept ACV coverage on roofs for single-family homes and condos. However, the rest of the house must still have RCV coverage, which usually has higher premiums but more extensive coverage. FHFA said the change is being made because replacement roof coverage has become expensive and hard to find in many states.
Other changes include simplifying the “maximum per-unit deductible,” expanding the “exempt from review” requirement to apply to both new and established condos, and retiring the 50% owner-occupancy requirement for established condos.
Condo projects will also see streamlined rules on master policy deductibles, a long-running industry concern as wind and hail deductibles rose, and some buildings risked falling out of agency eligibility.
The original change—made in February 2024 without stakeholder input or a formal rulemaking process—required properties with a federally backed mortgage to have full RCV homeowners’ insurance, the highest level of coverage. This type of coverage comes at a higher cost, and the guidance change effectively served as a de facto regulation barring other, more affordable, state-regulated insurance products that account for depreciation.
The Big “I” initially raised objections when the change was made under the Biden administration and won a pause in enforcement in May 2024. Mortgage lenders in marketplaces nationwide, however, continued to reference the Biden-era guidance change while denying consumers and would-be homebuyers’ alternative options.
Throughout this process, the Big “I” has worked tirelessly, holding regular meetings with the FHFA, Fannie Mae and Freddie Mac, submitting comments and technical correction suggestions, and engaging with members of Congress.
While the updated guidance will not address all lender challenges, it is a huge step forward. The Big “I” will continue to advocate for independent insurance agents as this process moves forward.
About the Author
Jeannine Giesler, CISR, CPIA, and past President of the OIA Board of Directors, Foundation for the Advancement of Insurance Professionals, currently serves as Resource Center Advisor for the OIA. The purpose of the Resource Center is to contribute to building a comprehensive library of resource materials for our members. We pride ourselves on being the one-stop shop for all OIA members and work to solve every problem or situation you may come across.
Cited Resources
Fannie Mae and Freddie Mac Roll Back Property Insurance Requirements
Date: March 19, 2026
Author: Nathan Riedel- Nathan Riedel is Big “I” senior vice president, federal government affairs.
Link: https://www.iamagazine.com/news/fannie-mae-and-freddie-mac-roll-back-property-insurance-requirements/ [iamagazine.com]
Fannie Mae and Freddie Mac Remove Certain Homeowners Insurance Requirements That Will Reduce Costs
Date: March 18, 2026
Link: https://www.fhfa.gov/news/news-release/fannie-mae-and-freddie-mac-remove-certain-homeowners-insurance-requirements-that-will-reduce-costs [fhfa.gov]
Fannie Mae, Freddie Mac Ease Insurance Rules to Lower Borrower Costs
Date: March 18, 2026 Author: Lance Murray
Fannie Mae, Freddie Mac Cut Home Insurance Costs for Millions of Families
Date: March 19, 2026 Author: Marcus Brennan
Link: https://brighttimesnews.com/fannie-mae-freddie-mac-cut-home-insurance-costs-for-millions-of-families/ [brighttimesnews.com]
