Servicing Guide

Published September 9, 2020

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What are the servicer responsibilities as it relates to obtaining Lender-Placed Insurance?

If the servicer cannot obtain evidence of acceptable property or flood insurance for a property securing a mortgage loan, the servicer must obtain lender-placed insurance in compliance with Fannie Mae’s insurance requirements. The following table provides the servicer’s responsibilities related to lender-placed insurance.

The servicer must...
 

Only issue lender-placed insurance coverage after it makes unsuccessful attempts to obtain evidence of insurance in accordance with applicable law.

 

Not use a lender-placed insurance carrier that is an affiliated entity, as defined below, for a lender-placed insurance policy, including any captive insurance or reinsurance arrangements with an affiliated entity.

 

Exclude any lender-placed insurance commissions or payments (including any incentive based compensation regardless of its designation as commission, bonus, fees, or other types of payments from the servicer’s lender-placed insurance carrier; for example, underwriting bonuses or other payments based on insurance loss ratios) earned on a lender-placed insurance policy by the servicer, broker, or any affiliated entity, as defined below, from the lender-placed insurance premiums charged to the borrower or submitted for reimbursement from Fannie Mae.

 

Provide copies of its lender-placed insurance policy, including any other contractual arrangements between the servicer and a lender-placed insurance carrier, upon Fannie Mae’s request.

 

Provide any documentation or data relating to its lender-placed insurance activities and lender-placed insurance coverage requested by Fannie Mae within 30 days of Fannie Mae’s request.

 

In compliance with applicable law:

  • terminate any lender-placed insurance, and

  • refund all lender-placed insurance premiums and fees charged during any period of coverage overlap.

For more information please see: B-6-01, Lender-Placed Insurance Requirements.
 

 

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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.

Guide Resources

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Visit Selling and Servicing Guide Communications and Forms

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