A ratings agency has plans to downgrade more than two dozen Florida-based property insurance companies in a move that could cost more money for homeowners with loans.

The ratings firm Demotech plans to downgrade the 27 insurers from an "A" rating to ratings of either "S" for substantial or "M" for moderate, according to the South Florida Sun Sentinel.

Demotech rates 40 Florida-based insurance companies.

Florida Insurance Commissioner David Altmaier and Chief Financial Officer Jimmy Patronis criticized the ratings agency for the downgrade planned for later this month. They said the decision was based largely on the company's opinion that legislative reforms enacted over the past two years were not enough to bring the state's overall insurance market back to health. The market has been facing losses over the past five years.

By doing that, the ratings firm was a applying methodology that fell outside the criteria it is supposed to use, the Florida officials said in letters.

"This is an example of inconsistent, monopolistic power of a select rating agency and is trying to exert coercive influence over Floridians and policymakers in an effort to thwart public policy according to its own opinions," Altmaier said in his letter.

Federal mortgage loan guarantors Fannie Mae and Freddie Mac require borrowers of loans it backs to maintain insurance coverage with A-rated insurers. Borrowers with insurance backed by companies rated below A could find themselves in default of the terms of their home loans. If that were to happen, Fannie Mae and Freddie Mac could then order mortgage servicers to get more expensive coverage by acceptable insurers on the home loans they manage.

From a homeowners' perspective, the timing is bad, said Paul Handerhan, president of the consumer-oriented watchdog group Federal Association for Insurance Reform.

"Can you imagine, with the height of hurricane season around the corner, if you just paid your insurance bill for the year and suddenly your mortgage servicer says, 'You're out of compliance and we're going to force-place you' and charge $5,000 or $6,000? That's a real potential," Handerhan said.

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