A tweak to insurance rules could be pivotal to addressing housing affordability and accessibility.
Updated guidance by the Federal Housing Finance Agency (FHFA) provides consumers with the choice to insure their roof in a way that best fits their needs while understanding market challenges. It has the potential to cut costs and open pathways to housing, and like any significant change, consumers should know the risks.
The FHFA provided guidance in March on a property insurance rule with the intent of helping consumers lower costs. It allows consumers to choose actual cash value (ACV) coverage for roof insurance for borrowers with mortgages backed by Fannie Mae or Freddie Mac (the Enterprises).
This updated guidance comes after previous changes to insurance requirements made in early 2024. Borrowers, backed by the Enterprises, were required to carry replacement cost value (RCV) for property insurance. It reflected a misunderstanding of the market challenges facing consumers, which was rising costs and difficulty obtaining required coverage.
Leah Locke is a Policy Analyst with the American Consumer Institute, a nonprofit education and research organization. Follow Leah on X @leahmlocke