Fannie Mae Servicing Guide B-2-02 — Property Insurance Requirements for One- to Four-Unit Properties

Fannie Mae Servicing Guide B-2-02 — Property Insurance Requirements for One- to Four-Unit Properties

Effective 2026-08-12 · publisher's stamp for this provision

B-2-02, Property Insurance Requirements for One- to Four-Unit Properties (08/12/2026) Introduction This topic contains the following: Overview Minimum Monitoring Requirements for First Lien Mortgage Loans Minimum Monitoring Requirements for Second Lien Mortgage Loans Mortgagee Clause Requirements for Second Lien Mortgage Loans Overview 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. Minimum Monitoring Requirements for First Lien Mortgage Loans 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. New or Renewal Policy Minimum Requirements New Policy The servicer must confirm that the property insurance policy meets the requirements for • insurer rating, as described in Selling Guide B7-3-01, General Property Insurance Requirements for All Property Types; and • required perils, coverage sufficiency, and maximum deductible, as described in Selling Guide B7-3-02, Property Insurance Requirements for One-to Four-Unit Properties. New or Renewal Policy Minimum Requirements Renewal Policy At least annually, the servicer must confirm that the property insurance policy meets the requirements for • insurer rating, as described in Selling Guide B7-3-01, General Property Insurance Requirements for All Property Types; and • required perils, coverage sufficiency, and maximum deductible, as described in Selling Guide B7-3-02, Property Insurance Requirements for One-to Four-Unit Properties.If, based on the initial evidence of insurance provided, the servicer is unable to confirm whether the policy meets the replacement cost coverage requirements in Coverage Sufficiency in Selling Guide B7-3-02, Property Insurance Requirements for One-to Four-Unit Properties, the servicer is authorized to determine whether the policy coverage amount in the policy under review has decreased from the last known coverage amount and take the action described in the following table. If the policy coverage amount... Then... has decreased from the last known coverage amount or the servicer cannot determine the last known amount the servicer must take additional steps it deems appropriate to confirm that the property insurance policy meets the replacement cost coverage requirements in Coverage Sufficiency in Selling Guide, B7-3-02, Property Insurance Requirements for One-to Four-Unit Properties and document its efforts in the individual mortgage loan file. has not decreased from the last known coverage amount any additional action the servicer takes to confirm that the property insurance policy meets the replacement cost coverage requirements in Coverage Sufficiency in Selling Guide, B7-3-02, Property Insurance Requirements for One-to Four-Unit Properties is at its discretion. 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. Minimum Monitoring Requirements for Second Lien Mortgage Loans The servicer must have procedures in place to monitor and confirm sufficient property insurance coverage is in place for second lien mortgage loans. Mortgagee Clause Requirements 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.

Source: Fannie Mae Servicing Guide B-2-02 — Property Insurance Requirements for One- to Four-Unit Properties · source URL · snapshot 4a2da47a915f9276