Servicing Guide

Published September 9, 2020

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When does the borrower have to use a licensed contractor to restore or repair property damages from an insured loss event?

The servicer must follow the requirements described in the following table for a mortgage loan that is current or less than 31 days delinquent at the time of the loss event.

If the insurance proceeds are… Then…  

less than or equal to $40,000

the servicer must determine if, based on the type of repairs (e.g., damage affecting the safety, soundness, or structural integrity of the property), a licensed contractor is required to restore or repair the property

 

greater than $40,000

the servicer must ensure a licensed contractor is used to restore or repair the property

Note: In the event that a state or jurisdiction does not require licensing of contractors, the servicer must ensure the contractor is bonded and insured for an amount equal to or greater than the insurance loss proceeds

 

 

For mortgage loans that are 31 days or more delinquent, without regard to the amount of the loss proceeds, the servicer must ensure a licensed contractor is used to restore or repair the property.

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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Visit Selling and Servicing Guide Communications and Forms

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