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Freddie Mac and Fannie Mae Update on Replacement Cost Value (RCV) Compliance

In response to industry concerns and feedback, Freddie Mac and Fannie Mae announced that effective immediately and until further notice, Freddie Mac and Fannie Mae will not cite Servicers for noncompliance related to Servicers obtaining replacement cost values in connection with determining hazard insurance sufficiency.


This includes situations where lenders fail to obtain lender-placed insurance for coverage insufficiencies due to not utilizing replacement cost value. Freddie Mac and Fannie Mae will work with industry partners to assess reported obstacles related to lenders’ and servicers’ compliance with replacement cost value requirements.


Servicers are still required to obtain lender-placed insurance when the borrower does not maintain an active property insurance policy.


Seller and servicer representation and warranty obligations remain unchanged for losses resulting from insufficient insurance and compliance with flood insurance requirements is not impacted by these notifications.


Freddie Mac’s notice can be viewed here: Industry Letter 05-08-2024


Fannie Mae’s notice can be viewed here: Selling and Servicing Notice


Proctor Loan Protector will continue to monitor these topics and provide updates as they develop.