Fannie Mae's plan to reduce the cost of forced-place insurance by bringing in new specialty lenders was scotched by its regulator Monday, prompting outrage from consumer groups.
Representatives of the Consumer Federation of America were also upset that representatives of mortgage-lending trade groups were on the conference call where the regulator, the Federal Housing Finance Agency, discussed the issue with Fannie Mae staff and announced the decision, while consumer groups were not asked to participate.
Besides mortgage banks, which receive a share of the commission on force-placed lending, the two main beneficiaries of the decision are Assurant and QBE, which dominate the forced-place market.
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