In response, Fannie and Freddie stated that for borrowers who were current on their payments before the storm and have less than 80 percent damage to their homes, banks and mortgage servicers "have complete and unlimited discretion to disburse insurance proceeds" and "should apply the same practices to their Fannie- and Freddie-backed loans as they do to loans that such banks and servicers own themselves."

According to the department, that means many banks are now releasing much more money to borrowers, and the five participating banks and mortgage servicers alone will be immediately releasing an estimated $70 to $80 million to current borrowers as a result of the rule changes.