Senators Urge FHFA to Repeal Policy Mandating Replacement Cost Value Homeowners Insurance

Senator Deb Fischer and a group of Republican colleagues have formally requested the Federal Housing Finance Agency (FHFA) to rescind a recent policy that mandates Replacement Cost Value (RCV) homeowners insurance for all federally-backed mortgages. This policy, initiated under the previous administration, requires Fannie Mae and Freddie Mac to enforce RCV coverage, which pays for the full replacement cost of damaged property without accounting for depreciation. The senators argue that this one-size-fits-all insurance requirement disregards the diversity in the U.S. housing market, particularly affecting rural homeowners where property appraisals often fall below replacement costs. They point out that prohibiting Actual Cash Value (ACV) insurance, which accounts for depreciation and typically incurs lower premiums, reduces consumer choice and affordability. The letter emphasizes that the Enterprises’ mandate could increase insurance costs and limit mortgage market access for many families, particularly in rural communities. The senators urge FHFA Director William Pulte to repeal this guidance, advocating for insurance options that better reflect varied local market conditions and consumer needs. This stance is supported by several industry groups including NAMIC, APCIA, and the Independent Agents & Brokers of America, highlighting a significant industry pushback against federal insurance mandates affecting mortgage approvals and homeownership costs.