OK, fine; I am speaking of those entities who originate and collect payment on a home loan. You pointed me to a government-sponsored enterprise that places an insurance stipulation in the terms of its voluntary contract with lenders who wish to guarantee or pass-through their loans.

Granted, almost no one will originate a subprime loan these days, because everyone in the private-label MBS business got out or was bailed out, so the best this example shows is a de facto standard set by the guarantor of last resort.

I own a non-warrantable property where Fannie Mae and Freddie Mac will not buy the mortgage. The bank still requires property insurance. Property insurance is not something invented by them that banks would not require otherwise.

Fannie Mae and Freddie Mac manage only about 40% of the mortgage market in the United States. Now, that's big enough to have a significant effect on the entire rest of the market but they do not control the entire mortgage market.

Parent is probably referring to the secondary mortgage market (mortgage-backed securities), of which F&F now control more like 90%.