Fannie Mae and Freddie Mac Roll Back Property Insurance Requirements

• By: Nathan Riedel
• March 19, 2026

Yesterday, 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 and Freddie 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 and Freddie, 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.

Nathan Riedel is Big “I” senior vice president, federal government affairs.