A plan to slash premiums for replacement homeowners insurance has been killed by the Federal Housing Finance Agency, according to people informed of the agency's decision.

The move was announced on a Monday FHFA conference call with Fannie Mae staff and mortgage industry trade groups. The FHFA is the regulatory overseer of Fannie Mae and Freddie Mac. Its decision will block a previously announced Fannie plan that was aimed at acquiring low-cost force-placed insurance from its own vendors and preventing banks from collecting payments for steering business to force-placed carriers.

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