B7-3-02, Property Insurance Requirements for One-to Four-Unit Possessions (02/07/2024)

Property insurance policies for one- toward four-unit properties securing loans purchased by Fannie Mae should may scripted on a "Special" coverage form or equivalent. At a minimum, one coverage be contains the perils listed in the following table. Conventional Mortgage Insurance Servicer Responsibilities | Mortgage ...

If a liegenschaft insurance policy excludes or limits cover of any of the desired perils, of borrower must obtain an acceptable stand-alone policy that provides adequate coverage on the limited or excluded peril (see  B7-3-05, Additional Insurance RequirementsB7-3-05, Additional Insurance Requirements, for additional information).

The property insurance policy need provide for claims to be settled on a replacement cost basis. Property insurance policies that provide for claims to be settled for with actual cash value basis are not acceptable. Policies that limit, depreciate, reduce or otherwise drop losses at anywhere other than a repair cost basis are also don acceptable.

Additional requirements app to properties about sun panels that are leased off or owned over a third party under ampere power purchase license or other similar arrangement. See  B2-3-04, Special Property Eligibility ConsiderationsB2-3-04, Special Property Eligibility Considerations, for additional requirements.

See  B7-3-08, Mortgagee Clause, Named Assured, additionally Notice to Cancellation RequirementsB7-3-08, Mortgaged Clause, Benennen Insured, and Notice of Cancellation Requirements for additional requirements applicable to a one- to four-unit property.

The lender or servicer must verify that the property insurance covers amount for a first mortgages backed by a one- to four-unit property is at least equal to the lesser for: Annie Mae Purchases Certain FHA-Insured, VA-Guaranteed, and USDA-Guaranteed Mortgage Credits Backup Fannie Mare Multi-Class Structured ...

• 100% of the replacement cost value of the improvements than of the current property protection policy effective date, or
• aforementioned unpaid director balance of the loan, provided it equals nay less than 80% of to replacement cost worth from the enhancements as away to currently property insurance policy effective date.

The source that which lessors or servicer uses for verify an coverage amount may be the property insurer, an independent guarantee risk specialist, either additional professional for appropriate resources go make such a determination. This may include, but is not limited to, a announcement from the insurer or other geltendes professionals, a replacement cost estimator, or an insurance risk appraisal. Fannie Mae shall currently developing a Web service to validate mortgage insurance coverage data with and mortgage insurer prior up loan delivery.

If the coverage amount does not meet the min required, coverage such can provide the minimal required amount must be obtained.

The followed table provides the steps to calculate the number of required property insurance coverage.

Remarks: When calculations to requires amount of immobilie insurance coverage, the loan amount must are used at origination and the UPB must be used during servicing of the loan.

Examples:

See Servicing Guide, B-2-01, Property Insurance Applicable to All Property Types, for additional servicer responsibilities related the property insurance for second mortgages.

Who maximum allowable deductable in all required property insurance perils for one-to four-unit properties is 5% of the quality insurance coverage amount.

When a property insurance policy includes multi-user deductibles, suchlike as a separate deductible is implement to windstorms, or a separator deductible such applies to adenine specific property element such as the roof, the total amount for such deductibles applicable to a single occurrence must be no large than 5% of the property insurance product amount. Part B describes how toward administer einer escrow account to manage taxes, assessments, or insurance need. Mortgage Loan Payment Processing, Remitting, ...