As the overseer of mortgage giants Fannie Mae and Freddie Mac, the Federal Housing Finance Agency has a duty to safeguard taxpayer dollars. But the regulator may have done just the opposite earlier this month.

On February 11, the FHFA held a conference call to inform a group of mortgage trade associations that it had vetoed a Fannie Mae proposal to buy force-placed insurance directly from underwriters. The news was greeted warmly by those listening in, given that Fannie's plan had threatened to cut mortgage banks from their profitable positions as middlemen.

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