Servicing Guide

Published September 9, 2020

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How is the acceptable property insurance coverage amount determined for a One-to Four-Unit Property?

The following table outlines the actions that the servicer must take to determine whether the insurance coverage amount meets Fannie Mae’s requirements.

Step Servicer Action
1

Compare the insurable value of the improvements (as established by the property insurer) to the UPB of the mortgage loan.

If... Then...

the insurable value of the improvements is less than the UPB

the insurable value will be the amount of coverage required.

the UPB of the mortgage loan is less than the insurable value of the improvements

go to Step 2.

2

Calculate 80% of the insurable value of the improvements.

If the resulting amount is... Then...

equal to or less than the UPB of the mortgage loan

the UPB will be the amount of coverage required.

greater than the UPB of the mortgage loan

this calculated figure will be the amount of coverage required.


The following table provides examples of calculating the amount of coverage required.

Category Property A Property B Property C

Insurable Value of the Improvements

$90,000

$100,000

$100,000

UPB

$95,000

$90,000

$75,000

80% of the Insurable Value of the Improvements

$80,000

$80,000

Amount of Coverage Required

$90,000

$90,000

$80,000


For more information please see F-1-02, Escrow, Taxes, Assessments, and Insurance 

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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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