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Florida's Temporary Market Stabilization Arrangement Accepted by Fannie Mae and Freddie Mac

Dec 7, 2022

Today, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) noticed all of its Single-Family Sellers/Servicers with guidance on the acceptance of property insurance policies in Florida, in conjunction with the Florida Office of Insurance Regulation's (OIR) establishment of the Temporary Market Stabilization Arrangement. The Fannie Mae Lender Letter is available here. The Freddie Mac bulletin is available here.

The guidance states servicers may accept, on a provisional basis, a property insurance policy covering a property insurance policy written by an insurer participating in the temporary market stabilization arrangement.

"The temporary market stabilization arrangement is an innovative solution to address immediate consumer needs," said Insurance Commissioner David Altmaier. "As we continue to pursue solutions which provide stability to our market, OIR remains committed to ensuring Floridians have access to coverage."

In July, OIR announced a plan to establish a temporary market stabilization arrangement through Citizens Property Insurance Corporation (Citizens) in the event of disruptive financial rating downgrades. 

Fannie Mae and Freddie Mac require that property insurance policies for properties with a mortgage backed by the government-sponsored enterprises must be written by an insurer meeting financial rating requirements. Fannie Mae and Freddie Mac offer an exception to the financial rating requirements for an insurer that is covered by a reinsurer who assumes, by endorsement, 100 percent of the insurer’s liability for any covered loss payable, but unpaid by the insurer, by reason of insolvency. 

As a result, OIR, in conjunction with Citizens, established a program that meets the exceptions to the Fannie Mae and Freddie Mac guidelines. This unprecedented solution allows insurers to remain viable and ensures Floridians can maintain coverage in the voluntary market. 

Florida's temporary market stabilization arrangement expires June 1, 2023. A copy of the Immediate Final Order is available here. Additional information on Florida's temporary market stabilization arrangement is available on OIR's website here.



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