B-2-02, Property Insurance Requirements for One- to Four-Unit Properties (08/12/2026)

This topic describes additional requirements only applicable to servicers. Refer to Selling Guide, B7-3-02, Property Insurance Requirements for One- to Four-Unit Properties for property insurance requirements for mortgage loans secured by a one- to four-unit property, including

• required perils,
• coverage sufficiency, and
• maximum deductible.

Refer to Selling Guide, B7-3-08, Mortgagee Clause, Named Insured, and Notice of Cancellation Requirements for the applicable requirements for mortgage loans secured by a one- to four-unit property.

While the servicer remains obligated in accordance with Selling Guide A2-1-03, Indemnification for Losses, the following describes Fannie Mae's minimum requirements for monitoring property insurance policies depending on whether the policy obtained is a new or renewal policy.

Upon identifying that a property insurance policy does not comply with one or more of the above requirements, the servicer must notify the borrower of the insufficiency.

The servicer must have procedures that describe the methods used to adhere to the minimum monitoring requirements. If the servicer relies on a process to monitor for instances when a policy's coverage amount decreases, the procedures must describe the methods used to monitor for coverage decreases and the subsequent steps to confirm evidence of coverage that meets our requirements. Additionally, the servicer's procedures must describe the steps, as applicable, used to attempt to resolve a non-compliant property insurance policy, which may include lender-placed insurance.

The servicer must have procedures in place to monitor and confirm sufficient property insurance coverage is in place for second lien mortgage loans.

For a second lien mortgage loan, the mortgagee clause in the property insurance policy for the first lien mortgage loan must be amended to recognize the second lien mortgage loan and to clearly set out Fannie Mae's interest in the policy coverage.