Servicing Guide

Published October 14, 2020

For best results, pose your search like a question.

Guide Resources

For a comprehensive list of resources such as forms, announcements, lender letters, notices and more.

Visit Selling and Servicing Guide Communications and Forms

Customers Recommend Ask Poli

AskPoli

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

Launch Ask Poli  

Download PDF Guide

You can also download the printable ~800 page PDF, which include links.

Download Now

E-4.4-01: Continuing or Canceling Property Insurance Coverage (11/13/2019)

The servicer's action regarding the continuation or cancellation of property insurance coverage following the foreclosure sale or acceptance of an executed Mortgage Release will depend upon

  • the type of mortgage loan that was liquidated, and

  • whether the property will be conveyed to the insurer or the guarantor.

Any inquiries regarding the cancellation of property insurance should be addressed to Fannie Mae’s SF CPM division (see F-4-03, List of Contacts).

Fannie Mae’s property recovery firms assume all responsibilities for filing any necessary property insurance claims for losses identified post-foreclosure for

  • conventional first lien mortgage loans,

  • conventional second lien mortgage loans for which Fannie Mae either had an ownership interest in the first lien mortgage loan or paid off the first lien mortgage loan in connection with the foreclosure of the second lien mortgage loan,

  • FHA or VA mortgage loans that cannot be conveyed to the insurer or guarantor, and

  • special servicing option RD guaranteed mortgage loans.

The property recovery firm may contact the servicer to obtain information about any applicable property insurance policy and carrier(s) and any recent property inspections completed by the servicer. The servicer must provide all requested information or documentation to the property recovery firm within three business days.

This topic contains the following:


For Conventional Mortgage Loans

The following table describes the servicer's responsibilities related to the cancellation of property insurance coverage for all first and second lien conventional mortgage loans when the property is acquired.

Within 14 days after the foreclosure sale or acceptance of an executed Mortgage Release, the servicer must...

Ask the property insurance carrier to cancel the policy and, unless prohibited by the policy or applicable law, send it any unearned premium refund.

Request cancellation of Fannie Mae's mortgagee interest in the policy and removal of its name from the policy if the insurance carrier is not willing to cancel the policy because Fannie Mae is not the named insured.

For information regarding the servicer’s responsibilities prior to liquidation for maintaining a required property insurance coverage and addressing insurable damage or potential damage due to a disaster event, see B-2, Property Insurance Requirements, B-5-01, Insured Loss Events, and D1-3-01, Evaluating the Impact of a Disaster Event and Assisting a Borrower.


For FHA Mortgage Loans

The following table describes servicer requirements for FHA mortgage loans that will be conveyed to HUD.

The servicer must...

Obtain an endorsement to the property insurance policy to reflect Fannie Mae's interests immediately following the foreclosure sale.

Cancel the insurance coverage on the date the deed to HUD is filed for record and include the amount of the refund, or an estimated refund amount if the refund has not been received, as a deduction on the FHA MI claim.

If the property cannot be conveyed to HUD, the servicer must instead adhere to the policy described for conventional mortgage loans in For Conventional Mortgage Loans earlier in this topic.

When the servicer receives the refund of the unearned property insurance premium from the insurer, it must immediately remit the funds to Fannie Mae as a “special remittance.” However, if Fannie Mae has not reimbursed the servicer for all of its outstanding foreclosure expenses, the servicer may keep the property insurance premium refund and show it as a credit on the request for expense reimbursement that it submits to request reimbursement of its outstanding expenses for the mortgage loan.

Note: This does not pertain to property insurance proceeds, but only premium refunds.


For VA Mortgage Loans

For VA mortgage loans that will be conveyed to VA, the servicer must endorse the applicable property insurance policy over to VA immediately following the foreclosure sale. If the property cannot be conveyed to VA, the servicer must adhere to the policy for conventional mortgage loans in For Conventional Mortgage Loans earlier in this topic.


For RD Mortgage Loans

For modified special servicing option or regular servicing option RD mortgage loans, the servicer's decision about canceling the property insurance policy or Fannie Mae's mortgagee interest in it must be made in accordance with RD requirements.

For special servicing option RD mortgage loans, the servicer must adhere to the policy for conventional mortgage loans in For Conventional Mortgage Loans earlier in this topic.

Have You Tried Ask Poli?

Poli knows. Just ask.

Ask Poli features exclusive Q&As and
more—plus official Selling & Servicing
Guide
content.

Try Ask Poli

Related Articles


AskPoli

Customers Recommend Ask Poli

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

Guide Resources

For a comprehensive list of resources such as access forms, announcements, lender letters, notices and more.

Visit Selling and Servicing Guide Communications and Forms

X
Having Issues with Seeing this Page Correctly?

Use Firefox or Chrome   How to do a hard refresh in Internet Explorer
We recommend that you use the latest version of FireFox or Chrome.

Download Firefox
Download Chrome
  A hard refresh will clear the browsers cache for a specific page and force the most recent version of a page.
    Hold the Ctrl key and press the F5 key.
     

Email Us
If you still have Technical Support questions, feel free to emailAsk_Poli@fanniemae.com.