Fannie Mae Explores Mortgage Insurance Pilot Program

According to an article in National Mortgage News, a new mortgage insurance program currently being piloted by Fannie Mae reflects a regulatory mandate to explore new credit risk transfer alternatives, but some industry participants claim it may encroach on the line separating the GSEs secondary market activity from the primary market. The new initiative is a front-end risk-sharing program called “Enterprise-Paid Mortgage Insurance” or EPMI, and shares many characteristics of a similar program at Freddie Mac called Integrated Mortgage Insurance, or IMAGIN. Under the program Fannie Mae will obtain and pay premiums on private mortgage insurance policies in such a way that the loans they purchase are compliant with the mandates of their charter for low down payment mortgages. The article notes that this insurance will be paid for by loan-level price adjustments and ultimately passed along to borrowers.

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