Is it acceptable to have an individual property insurance policy on a condominium unit versus requiring the project to maintain a master property policy?

Fannie Mae generally does not require individual insurance policies for a condo unit that secures a first mortgage or for a co-op share loan. However, if the legal documents for the project allow for unit insurance policies for each first mortgage that Fannie Mae purchases or securitizes in a condo or co-op project, Fannie Mae will accept the individual unit insurance policies that meet the requirements in B7-3-06, Evidence of Property Insurance, and Chapter B7–3, Property and Flood Insurance.

Common element coverage must also be verified, however lenders may apply the flexibility for insignificant elements noted in the Project Insurance FAQs in the Selling Guide.