Servicing Guide

Published December 08, 2021

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B-2-02: Property Insurance Requirements for Mortgage Loans Secured by a One- to Four-Unit Property (12/08/2021)

Introduction

This topic contains the following:

 

Determining Minimum Coverage Amounts for First Lien Mortgage Loans

Refer to Selling Guide B7-3-02, General Property Insurance Coverage and B7-3-03, Determining the Amount of Required Property Insurance Coverage for information on determining minimum coverage amounts for first lien mortgage loans.

 

Determining Minimum Coverage Amounts for Second Lien Mortgage Loans

When the existing coverage for a property that secures a second lien mortgage does not provide coverage equal to the lesser of 100% of the insurable value of the property improvements or the combined unpaid principal balance of the first-lien and second-lien mortgages (as long as that equals at least 80% of the insurable value of the improvements), the servicer must require the borrower to obtain appropriate endorsements to bring the coverage in line with Fannie Mae's requirements. A copy of any endorsements should be sent to the first-lien mortgage servicer.

 

Maximum Allowable Deductible Requirements

Refer to Selling Guide B7-3-02, General Property Insurance Coverage for maximum allowable deductible amounts. Also, see B-6-01, Lender-Placed Insurance Requirementsfor the deductible requirements for a lender-placed insurance policy.

 

Mortgagee Clause Requirements

Refer to Selling Guide B7-3-08, Mortgagee Clause for Property and Flood insurance for mortgagee clause requirements.

Type of Mortgage Loan Mortgagee Clause Requirements

Second lien mortgage loan

The mortgagee clause in the property insurance policy for the first lien mortgage loan must be amended to recognize the second lien mortgage loan and to clearly set out Fannie Mae’s interest in the policy coverage.

 

 

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–2015–13 October 14, 2015

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