B-2-01: Property Insurance Requirements Applicable to All Property Types (12/21/2022)

Verify annually that the selected insurer, policy amount and type of coverage meet Fannie Mae’s requirements. Refer to Selling Guide B7-3, Property and Flood Insurance for specific requirements.

Ensure requirements contained in any negotiated contract are met.

Ensure property insurance premiums are paid. See B-1-01, Administering an Escrow Account and Paying Expenses for additional information.

Immediately obtain new coverage to meet Fannie Mae’s requirements if the borrower allows the insurance coverage to lapse. See B-6-01, Lender-Placed Insurance Requirements for additional information.

Contact its Fannie Mae Servicing Representative (see  F-4-02, List of Contacts) to determine if additional coverage is needed as described in Selling Guide B7-3-05, Additional Insurance Requirements.

Change the insurance coverage for a mortgage loan when it is inadequate to protect Fannie Mae’s interests or, in the instance of lender-placed insurance, causes Fannie Mae to be over-insured. Examples include properties that become vacant and home renovation loans. See Selling Guide B7-3-05, Additional Insurance Requirements for additional information.

Obtain and review a copy of the property insurance policy annually to determine if the insurance coverage meets Fannie Mae’s requirements.

Require the borrower to obtain appropriate endorsements that will bring the coverage in line with Fannie Mae’s requirements if the existing property insurance policy does not provide the amount of coverage Fannie Mae requires and send a copy of these endorsements to the servicer of the first-lien mortgage loan.