There is a problem with force-placed insurance policies that lenders issue in the name of a homeowner who has lapsed on his or her homeowner policy according to the Federal Housing Finance Agency (FHFA) that oversees Fannie Mae and Freddie Mac mortgage loans.
The agency reported their findings in the March 2013 Federal Register stating that the force-placed insurance is sometimes “double those for voluntary insurance” and often “significantly higher.” These higher premiums may force a homeowner into foreclosure thus impacting FHFA. The agency cited the following two solutions to rectify the problem:
1. Ban lenders and loan servicers from “receiving, directly or indirectly” payments for placing coverage with an insurer or maintaining placement.

2. Ban lenders and loan servicers from receiving money from any reinsurer (a non-public insurer that covers private insurance companies) that is “owned by, affiliated with or controlled by the sellers or servicer.”