Hey, everybody, real estate ninja here. I hope you’re doing well. Fannie Mae is about to get their dirty little hands into your pocketbook because they’re going to change a rule. Or if they go through with this, that will cause your insurance to rise even more. Homer’s insurance, that is. This is an excellent, excellent example of how the government should stop meddling because they are going to. A lot of people may think this is really good, this is great, they’re watching after you, but they actually know this is going to hurt. You could, because it’s going to take away one of your rights to choose what type of insurance.

Let me give you an example. It says here this is out of the insurancejournal.com Dot Fannie Mae guidelines raise concerns could bar ACV coverage for homes an updated guideline from Fannie Mae, if it stands, could throw a wrench into the property casualty insurance industries move towards actual cash value for more homeowners and condo coverage. A Fannie Mae spokesperson said the government backed mortgage program, which supports a large share of the US mortgage market, has clarified a longstanding guideline that requires that insurance policies provide replacement value coverage. Okay, so they want replacement value coverage. The insurance companies want to give people the option because it’s still your option between actual cash value, which is lower, lower if something happened to your home, than actual replacement value.

Why? Well, especially in this day and age when inflation is rising even more insurance companies are either going broke or stopping halting insurance coverage. They are finding it harder and harder when they charge you x for your premiums to pay you x plus two, let’s say for when you get paid out because the premiums are based off of a certain payout. But now with the cost of lumber going up, the cost of sheetrock, the cost of construction, if a house gets damaged or destroyed, the replacement cost is out of this world again because of the craziness in the government.

So you can see where this is gonna be a big issue now, Fannie Mae’s longstanding selling guide policy requires property insurance claims to be settled on a replacement cost basis. Updates made to Fannie Mae’s selling guide in December of 2022 in February 2024 further clarified that Fannie Mae’s well established property insurance requirements do not allow claims to be settled on actual cash value basis, as well as related lender and servicer responsibilities. The corporation noted. Now I think about this, okay? Fannie Mae has always there saying, hey, no, this has been our rule for a while. We want replacement value.

The insurance company is going okay, Fannie, I don’t know if you understand this, but your little dirty government fingers are meddling so much. The government is causing this inflation wave. That is not a joke. They are causing it. And we need to give our clients a choice. Hmm. It’s not good at all. Now, Fannie is one of the largest buyer of home loans in the country. Massive, massive. So when we’re talking about this being a problem, it’s a big problem because insurance companies have said before, hey, we want to be recently, as inflation is taking off, hey, we want to be able to give an option.

Isn’t that important? Think about that. If you are buying a house right now and you are just barely making it and you want to buy a house, there’s nothing wrong with that, right? You will buy a house. And then the insurance agent, when you go to, you get sticker shock and you’re like, what the heck? How much is insurance gonna actually cost? Well, sorry, the government’s forcing us to do this. We can’t give you an option between the two types. That’s insane. That’s one of the things that’s sort of great about insurance companies, because not only can you shop insurance company insurance to insurance company, but you actually have a buffet, if you will, of different types of policies, different types of coverage, different types of payouts that would suit your needs.

But just like what’s going on in California when the governor forces all fast food joints to go, hey, $20 a an hour, and it’s not just the hourly wage that went up, it’s the workman’s comp. You have burger joints that are charging like 20 something bucks for a hamburger. And now there’s a lot of them that are just firing thousands of people. This is what happens when the government steps in and goes, no, this is what is required. Think about it. Insurance. The only reason that banks require it or government lenders like Fannie or Freddie Mac require it is because they’re covering their butt.

If you walk away, that’s all they care about. They don’t care about you. They care about their investment. End of story. It’s a big deal. And I think you’re going to see this become even larger when in states like California and places where insurance companies are already abandoning and walking away, a lot of insurance companies are. All right, no problem. We’ll be the fast food joint of California. We’re just going to double your insurance policy premiums or we just walk away. Let me know down below what you think about this, but I think it’s just yet one more way that you’re going to see the housing market collapse take on a whole new speed or velocity, because it is finding yet one more barrier to entry for so many home buyers.

Hope you got something out of this. Real estate ninja is out..

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