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B-2-01: Property Insurance Requirements Applicable to All Property Types (12/08/2021)

Introduction

This topic contains the following:

 

Servicer Responsibilities Related to Property Insurance for First Lien Mortgage Loans

The servicer must ensure at all times that any required property insurance coverage is maintained to protect Fannie Mae’s interest in the mortgage loan. The following table lists the servicer’s responsibilities applicable to all first lien mortgage loans owned or securitized by Fannie Mae unless otherwise noted.

The servicer must...
 

Verify annually that the selected insurance carrier, policy amount and type of coverage meet Fannie Mae’s 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 if the insurable improvements of the property securing a mortgage loan are exposed to hazards a fire and extended coverage policy does not protect against.

 

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 overinsured. Examples include properties that become vacant and home renovation or construction mortgage loans where the renovation or construction work is completed or the borrower occupies the property. Also, see B-4-01, Builder’s Risk/Construction Site Insurance for additional information.

 

Servicer Responsibilities Related to Property Insurance for Second Lien Mortgage Loans

The following table lists the servicer’s responsibilities applicable to all second lien mortgage loans owned or securitized by Fannie Mae.

The servicer must...
 

Obtain and review a copy of the first lien mortgage loan 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.

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

 

Property Insurance Carrier Rating Requirements

Refer to Selling Guide B7-3-01, Property Insurance Requirements for Insurers for acceptable property insurance carrier ratings requirements.

 

Evidencing Acceptable Property Insurance

Refer to Selling Guide B7-3-06, Evidence of Property Insurance for acceptable evidence of property insurance.

 

Related Announcements

The following table provides references to Announcements that are related to this topic.

Announcements Issue Date
Announcement SVC-2021-09 December 8, 2021
Announcement SVC-2020-07 December 9, 2020
Announcement SVC-2018-09 December 12, 2018

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