Assurant Inc., the seller of insurance on foreclosed homes, rose the most since 2011 as the overseer of U.S. housing agencies said it’s requiring more study of Fannie Mae’s plan to cut costs for the coverage.
Assurant gained 6.7 percent to $41.05 at 4 p.m. in New York, the biggest advance on the 81-company Standard & Poor’s 500 Financials Index.
The Federal Housing Finance Agency said yesterday that it’s still evaluating force-placed coverage, the insurance that borrowers are required to buy when they lapse on existing policies. FHFA’s delay on Fannie Mae’s push is a “decisive positive” for insurers such as New York-based Assurant, because it reduces pressure to lower premiums, Kevin Barker, an analyst at Compass Point Research & Trading LLC., said in a note today.
“FHFA’s objective is consistent with what Fannie Mae was working to accomplish, to reduce costs, but to do so with all the pertinent information,” Meg Burns, senior associate director in FHFA’s office of housing and regulatory policy, said yesterday in an e-mailed statement. “This is a responsible and measured approach.”
Force-placed insurance is designed to protect lenders and mortgage investors when homeowners stop paying policy premiums. It’s typically selected by lenders and billed to borrowers.
American Banker reported in November that Fannie Mae was seeking to save hundreds of millions of dollars on force-placed insurance by finding alternative providers of the coverage. Regulators in California, Florida and New York have been pressing insurers to cut premiums amid inquiries into whether they charge too much.