Fannie Mae's controversial plan to insure its mortgages against a homeowner's death or disability hit another speed bump.

In a May 14 letter, the Department of Housing and Urban Development told Fannie that it considers the scheme a "new program"-a designation that triggers intensive scrutiny of the scheme's purpose and impact.

The letter was made public Tuesday by the chairman of the House Banking Committee, Rep. Jim Leach, R-Iowa, a leading critic of the program.

To help it evaluate the program, HUD has asked Fannie how its entry into this business would affect private companies not sponsored by the government and how the plan fits into the agency's mission to expand homeownership and housing affordability.

The Office of Federal Housing Enterprise Oversight, which monitors Fannie's safety and soundness, also has asked detailed questions on the tax and accounting treatment of the program, investment returns, and funding cost assumptions.

Fannie Mae defended its plan as a "fabulous initiative" that would help first-time homebuyers, and it said it is "in contact" with its regulator.

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