Fannie Mae Update for Project-Level Insurance
On December 14, 2016, Fannie Mae issued Ann.SVC – 2016-11 regarding insurance requirements for Condos, Cooperatives and PUDs.
The acceptable evidence requirements with regard to project-level property insurance for Condominiums, Cooperatives and Planned Unit Developments (PUDs) have been modified to assist Servicers in verifying coverage.
Servicers are now authorized to obtain either:
- a blanket insurance policy which covers Fannie Mae PUD, condo, or co-op mortgage loans with premiums paid by the Servicer as a corporate expense, or
- an insurance policy maintained by the Servicer which provides “walls-in” as well as loss assessment coverage as needed in the event of an uninsured loss
Fannie Mae notes that if an HO-6 policy is required, Servicers must continue to verify the existence of such policies and may not rely on the above methods as alternatives. Additionally, this change applies only to ongoing verification of insurance during the servicing of the loan. The requirement to verify the existence of master insurance coverage when the mortgage loan is sold to Fannie Mae remains the same.
Additional details can be found in the Servicing Guide section B-2-03 .