Fannie Mae has issued an announcement in which it informs mortgage servicers to halt a practice that could help them avoid repurchasing flawed home loans. Announcement SVC-2011-04, issued April 15th, prohibits its mortgage servicers from from entering into any agreement that modifies the terms of an approved mortgage insurance master policy on loans delivered to Fannie Mae. According to the announcement, prohibited agreements include, but are not limited to, agreements that directly or indirectly:
►Modify master policy provisions for settling of claims;
►Limit the right of a mortgage insurer to conduct file reviews or investigate claims;
►Limit the right of a mortgage insurer to rescind coverage;
►Rescind or modify coverage; or
►Restrict notice to Fannie Mae of changes in coverage status.
Fannie Mae requires that servicers disclose any such agreements previously enacted with mortgage insurers without delay and requests servicers provide Fannie Mae with a copy of any executed agreements or materials pertaining to an arrangement with mortgage insurers outside of an approved master policy.