Servicing Guide

Published November 10, 2020

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How should insurance loss proceeds not disbursed to the borrower be handled?

The servicer must deposit the insurance loss proceeds not disbursed to the borrower in an interest-bearing account. The following table provides a list of account requirements. 

The interest-bearing account must…
 

Be a T&I custodial account with a depository institution that meets Fannie Mae’s eligibility criteria for custodial depositories.

 

Be for the borrower’s benefit.

 

Yield interest equivalent to the interest the borrower could expect to obtain from a savings or money market account.

The servicer must pay the accumulated interest to the borrower once the repairs to the property have been completed, unless

  • the borrower requests an earlier disbursement of the interest, or

  • applicable law allows for the accumulated interest to be applied to the UPB.

Note: See Establishing Written Policies or Procedures in A4-1-01, Staffing, Training, Procedures, and Quality Control Requirements and A4-1-02, Establishing Custodial Bank Accounts for additional details, including requirements for addressing unapplied funds held in the T&I custodial account and for reporting the status of funds in the custodial account to Fannie Mae.

For more information please see: B-5-01, Insured Loss Events.

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If you have additional questions, Fannie Mae customers can visit Ask Poli to get information from other Fannie Mae published sources.

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