Freddie Mac Update for Project-Level Insurance
On November 30, 2016, Freddie Mac issued Announcement SVC-2016-21, which expanded the acceptable evidence requirements with regard to project-level property insurance for condominiums, cooperatives and Planned Unit Developments (PUDs).
If the Servicer is unable to obtain evidence of insurance for a Borrower’s unit, the Servicer is now able to acquire:
- A blanket insurance policy; or
- An agreement with an insurer to issue insurance that provides unit coverage and loss assessment coverage in the event of an uninsured loss.
The insurance provided under the blanket insurance policy or agreement must meet the following requirements:
- Be underwritten by an insurer with a current rating meeting the requirements under Section 8202.1 of the Freddie Mac Single-Family Seller/Servicer Guide
- Provide coverage for the Servicer and/or Freddie Mac
- Provide for at least 180-days’ written notice to the Servicer and if applicable, Freddie Mac before cancelling or terminating the coverage
- Be approved by any regulatory authority to which the Servicer is subject, if such approval is required
Freddie Mac intended for these additional options to provide relief when a Servicer is unable to obtain evidence of insurance for a unit within the aforementioned property types. The changes are effective immediately, but are not mandatory. Servicers are permitted to follow their existing procedures to meet insurance requirements.
Click the link for a copy of the Servicing Guide Revised Section 8202.8.