Section 501

Property and Liability Insurance

501.01

General Insurance – Applies to All Policies
501.01A

Generally

Guidance

When terms or acronyms for insurance forms and policies are capitalized in this Chapter, they refer to Insurance Services Office (ISO) forms and policies or their equivalent.  Other capitalized terms and acronyms have standard insurance industry meanings.

Requirements

Each PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). must be covered by compliant property insurance and liability insurance for the term of the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. .  If the BorrowerBorrowerPerson who is the obligor per the Note. fails to maintain any required insurance on a PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , you must obtain the required coverage.

All insurance policies must:

  • list the BorrowerBorrowerPerson who is the obligor per the Note. as a named insured;
  • be written on a per occurrence basis, except for earthquake insurance and professional liability Insurance, which may be written on a per occurrence or claims-made basis;
  • include a provision requiring the carrier to notify each Mortgagee and/or Additional Insured in writing at least 10 days before policy cancellation for non-payment of premium and 30 days before cancellation for any other reason, unless the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. expressly require the BorrowerBorrowerPerson who is the obligor per the Note. to notify the LenderLenderPerson Fannie Mae approved to sell or service Mortgage Loans. promptly of any notice of cancellation it receives;
  • except for professional liability insurance, name Fannie Mae as Additional Insured on all liability insurance and excess/umbrella insurance; and
  • contain a mortgagee clause and loss payable clause for the benefit of Fannie Mae, its successors, and assigns.

All property insurance policies must use ReplacementReplacementCapital item replacements and major maintenance needs identified by the Property Condition Assessment or otherwise required. Cost valuation, however, coverage for roofs may use Actual Cash Value or ReplacementReplacementCapital item replacements and major maintenance needs identified by the Property Condition Assessment or otherwise required. Cost valuation.

Guidance

All requirements apply to the review you perform before closing as well as to the Servicer’sServicer’sPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. annual compliance review.

You are expected to obtain the advance cancellation notice for the benefit of each Mortgagee and Additional Insured from the insurance carriers whenever possible.  When that is not possible, you should ensure that the final Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. have not been modified in any manner that limits

  • the Borrower’sBorrower’sPerson who is the obligor per the Note. obligation to provide prompt notice to the LenderLenderPerson Fannie Mae approved to sell or service Mortgage Loans. of any notice of cancellation it receives from an insurance carrier, or
  • any recourse liability of the BorrowerBorrowerPerson who is the obligor per the Note. or any GuarantorGuarantorKey Principal or other Person executing a Payment Guaranty, Non-Recourse Guaranty, or any other Mortgage Loan guaranty. as a result of any failure to maintain all insurance coverages required by the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. .  

Below is an acceptable mortgagee clause.

Fannie Mae, its successors and/or assigns, as their interest may appear
c/o [Lender Name]
Lender’s Street Address or PO Box
Lender’s City, State and Zip Code

Operating Procedures

If you are not able to obtain the advance cancellation notice from any insurance carrier, you must retain evidence of your attempts to obtain such notice provisions in your Servicing FileServicing FileYour file for each Mortgage Loan serviced. .

501.01B

Blanket and Other Policies Covering Multiple Properties

Requirements

The coverage provided by a blanket policy must be as good as, or better than, a single property insurance policy.  The PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). must be listed and identified in the policy or associated schedules.

Guidance

A blanket policy includes

  • blanket policies,
  • blanket programs,
  • first loss limit policies,
  • first loss policies,
  • layered programs,
  • master policies,
  • master programs,
  • property programs,
  • pooled insurance,
  • pooled programs,
  • shared limit policies, and
  • similar programs insuring multiple locations under the same insurance policy.

Blanket policies are acceptable as long as

  • all other requirements are met, and
  • the Terms and Conditions endorsement does not reduce, limit, or exclude any required coverage.

When evaluating a blanket policy or multiple property policies, you should consider the following:

  • Are the required coverages adequate for the subject property or properties?
  • If the blanket policy limits are less than 100% of the total insurable value of the covered properties, is the shortfall warranted by high policy limits and geographic dispersion?
  • If the blanket policy covers high catastrophic exposure in a geographically concentrated area, is the limit adequate for the exposure, or should the BorrowerBorrowerPerson who is the obligor per the Note. obtain additional coverage?

Programs insuring properties that are not under common ownership with the BorrowerBorrowerPerson who is the obligor per the Note. or a Key PrincipalKey PrincipalPerson who controls and/or manages the Borrower or the Property, is critical to the successful operation and management of the Borrower and the Property, and/or may be required to provide a Guaranty. , PrincipalPrincipalPerson who owns or controls specified interests in the Borrower per Part I, Chapter 3: Borrower, Guarantor, Key Principals, and Principals, Section 303: Key Principals, Principals, and Guarantors. , or AffiliateAffiliateWhen referring to an affiliate of a Lender, any other Person or entity that Controls, is Controlled by, or is under common Control with, the Lender. When referring to an affiliate of a Borrower or Key Principal: any Person that owns any direct ownership interest in Borrower or Key… of the BorrowerBorrowerPerson who is the obligor per the Note. , or managed by the same property management company may provide evidence of insurance that appears to be a standard layered program. 

You should look for red flags signaling that a program may not be a standard layered program, such as:

  • a significant savings in premium when a BorrowerBorrowerPerson who is the obligor per the Note. adds the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). to an existing policy; or
  • a large, rounded coverage limit for property insurance.

You may confirm common ownership through an insurance broker or agent.  If the covered properties are not related by ownership or under the same property management, you are expected to evaluate the insurance administrator, considering factors such as the acceptability of its business practices, possible payment of claim by the administrator, years in business, etc.  This evaluation is in addition to the other analysis expected for blanket policies.

Operating Procedures

You must document your analysis of any blanket policy in your Servicing FileServicing FileYour file for each Mortgage Loan serviced. .

501.01C

Insurance Carrier Rating

Requirements

All property and liability insurance carriers for new policies must:

  • if rated by A.M. Best Company, have a 
    • general policyholder rating of A- or better, and
    • financial size category of VI or better; or
  • if rated by Demotech, Inc., have a 
    • Financial Stability Rating of A or better, and
    • policyholder surplus of at least $40 million.

For any existing insurance policy (at origination or afterward), the carrier must: 

  • if rated by A.M. Best Company, have a
    • general policyholder rating of B++ or better, and
    • comply with the rating requirements for new policies at renewal; or
  • If rated by Demotech, Inc., comply with the rating requirements for new policies.

This rating requirement does not apply to the following coverages:

  • state wind pools or state funds, if they are the only coverages that can be obtained for a PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). ; or
  • flood insurance issued by the National Flood Insurance ProgramNational Flood Insurance ProgramProgram of flood insurance coverage and floodplain management administered under the National Flood Insurance Act. (NFIP) or written by companies approved under the NFIPNFIPProgram of flood insurance coverage and floodplain management administered under the National Flood Insurance Act. ’s Write Your Own program.

Per the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. , you must require the BorrowerBorrowerPerson who is the obligor per the Note. to immediately obtain replacement coverage with a compliant carrier, even if the policy has not yet expired, if a carrier is downgraded below

  • B++, if rated by A.M. Best Company, or
  • A, if rated by Demotech, Inc.

Guidance

A new policy is one that is not already in force, and is most common for an acquisition.  An existing policy is most common for a refinance or when the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). is added to a policy that the BorrowerBorrowerPerson who is the obligor per the Note. already has in force.

Operating Procedures

If a carrier providing an existing insurance policy has an A.M. Best Company rating below A-, you must retain evidence of the insurance carrier’s rating in your Servicing FileServicing FileYour file for each Mortgage Loan serviced. until the policy is renewed.  You must also monitor it on a quarterly basis to confirm that the rating is not downgraded below B++.

501.01D

Term

Guidance

Policies should have a term of at least 12 months.  For new Mortgage LoansMortgage LoansMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. , a PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). may be added mid-term to an existing 12-month policy.

You may accept a policy term of less than 12 months if:

  • when it expires, the policy will be renewed for at least 12 months; and
  • the shorter-term is not because of non-renewal or cancellation by the carrier.
501.01E

Payment of Premium

Requirements

Premiums for all required insurance policies must either be:

  • paid in full annually; or
  • payable in installments, for which you have receipts confirming timely payment.

Premium financing is permitted if the financing agreement has no negative impact on you, Fannie Mae, or the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. collateral, and does not include any conditions that could prevent you or Fannie Mae from receiving the insurance proceeds.  If the BorrowerBorrowerPerson who is the obligor per the Note. finances premiums, you must review a copy of the financing agreement and confirm that timely payment of each premium has been made.

Guidance

You should attempt to reinstate the annual payment of premiums at renewal of any policy.

Any financing agreement should include a requirement that you receive a notice of cancellation for any nonpayment of premium.

Operating Procedures

For Mortgage LoansMortgage LoansMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. where no insurance escrows are being collected, you must obtain evidence annually that all policies have been paid in full.

If the BorrowerBorrowerPerson who is the obligor per the Note. finances premiums, you must retain a copy of the financing agreement in your Servicing FileServicing FileYour file for each Mortgage Loan serviced. .  You must also keep receipts confirming timely payments.

501.01F

Evidence of Insurance

Requirements

You must have temporary or permanent evidence of insurance at the closing of the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. and by each renewal date.

You must have permanent evidence of insurance within 90 days of delivering the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. to Fannie Mae and each renewal date.

Guidance

For temporary evidence of insurance, the following forms are acceptable:

  • ACORD 28 – Evidence of Commercial Property Insurance (most recent version or, if applicable, the state-approved form), combined with ACORD 25 – Certificate of Liability Insurance;
  • ACORD 75 – Insurance Binder;
  • MBAMBAMortgage Bankers Association Evidence of Insurance – Commercial Property Form; and
  • if an ACORD certificate is not available, a joint letter from the BorrowerBorrowerPerson who is the obligor per the Note. and its licensed insurance broker/agent certifying that all coverages, terms, and conditions meet the requirements.

For permanent evidence of insurance, the following forms are acceptable:

  • An original or duplicate copy of the insurance policy.
  • For PropertiesPropertiesMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). securing Mortgage LoansMortgage LoansMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. with a UPBUPBUnpaid Principal Balance of $10 million or less, the MBAMBAMortgage Bankers Association Evidence of Insurance – Commercial Property Form.
  • For PropertiesPropertiesMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). securing a Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. with a UPBUPBUnpaid Principal Balance in excess of $10 million, or for blanket policies with multiple layers, duplicate copies of the primary insurance policies, which should:  
    • include a letter (signed and dated on company letterhead) from an individual authorized to execute evidence of insurance on behalf of the insurance carriers issuing each policy; and
    • state that all policies follow the same terms, conditions, and exclusions as the primary policy, with any differences specified.
  • For NFIPNFIPProgram of flood insurance coverage and floodplain management administered under the National Flood Insurance Act. flood insurance, the Policy Declaration page.

The following are not acceptable forms of permanent evidence:

  • insurance policy declarations pages (except for an NFIPNFIPProgram of flood insurance coverage and floodplain management administered under the National Flood Insurance Act. policy);
  • single policy endorsement;
  • insurance binders; and
  • certificates of insurance.

If an MBAMBAMortgage Bankers Association Evidence of Insurance - Commercial Property Form is used, it should:

  • be the most recent version or, if applicable, the state-approved form;
  • be completed in its entirety;
  • have an original signature of an individual authorized to execute the Evidence of Insurance on behalf of the insurance carriers issuing each policy; and
  • in states where the form is filed and approved, be on the appropriate state form.

Some insurance carriers use boilerplate policies that do not change from year to year.  In such cases, you should keep a specimen kit or library of such policies and endorsements and may place only the renewal Declarations Page in your Servicing FileServicing FileYour file for each Mortgage Loan serviced. as permanent evidence along with a list of endorsements. 

Operating Procedures

Permanent evidence must be retained in your Servicing FileServicing FileYour file for each Mortgage Loan serviced. .  Policies must be collected annually.

501.01G

Insurance Compliance and Data

Operating Procedures

You must complete an annual insurance compliance checklist, including the following information for all insurance coverages, and place it in your Servicing FileServicing FileYour file for each Mortgage Loan serviced. :

  • name of carrier, all insured parties, and the BorrowerBorrowerPerson who is the obligor per the Note. ;
  • coverage amount;
  • deductible amount(s);
  • policy term;
  • description of property insured; and
  • coinsurance percentage, if applicable.
501.01H

Post Closing Insurance Exceptions

Requirements

You must determine compliance with this Section on an annual basis.  Any request for an exception to the insurance requirements after origination and delivery of the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. must be submitted on the Multifamily Exception Review Form – Insurance (Form 4638) through the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, requested modifications, asset management reports, and data corrections for loan or property attributes. .  All supporting documentation must be included with the submission.

Guidance

Insurance exceptions granted by Fannie Mae are for the entire term of the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. , unless otherwise specified in the approval.

501.02

Property Insurance
501.02A

Minimum Coverage Amounts

Requirements

Each PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). must have property insurance throughout the term of the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. .  Coverage must be written on a Special Causes of Loss Form.

The coverage amount must be at least

  • 100% of estimated insurable value for single-building PropertiesPropertiesMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , and
  • 90% of estimated insurable value for multiple-building PropertiesPropertiesMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). .

Coinsurance cannot exceed 90%. 

The maximum deductible amount is based on the total insurable values of the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). insurance policy.

If the insurable value is...

The maximum deductible amount per occurrence is...

Less than $5 million

$15,000

Equal to or greater than $5 million, but less than $50 million

$25,000

Equal to or greater than $50 million, but less than $100 million

$100,000

Equal to or greater than $100 million

$250,000

These deductible amounts apply to all insurance coverages required by Part II, Chapter 5: Property and Liability Insurance, Section 501.03: Catastrophic Risk Insurance and Part II, Chapter 5: Property and Liability Insurance, Section 501.04: Liability Insurance, unless a different amount is specified.

Guidance

100% coinsurance with the Agreed Value endorsement is acceptable.  Renewal of the Agreed Value endorsement is not automatic.

501.02B

Business Income (including Rental Value) Insurance

Requirements

Each PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). must have business income insurance (including rental value insurance), covering all perils, including windstorm, flood, earthquake, and terrorism.

Coverage must be based on either

  • Actual Loss Sustained for 12 months, or
  • Effective Gross IncomeEffective Gross IncomeOn an annual basis or any specified period, the total of Net Rental Income plus other income per Part II, Chapter 2: Valuation and Income, Section 203: Income Analysis and the applicable products and features in Part III. for the most recent annual reporting period.

The maximum deductible for business income insurance cannot exceed the greater of the maximum deductible for the property insurance policy or a waiting period of up to 72 hours.

Coverage for a Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. with a UPBUPBUnpaid Principal Balance of $25 million or more must include a 90-day Extended Period of Indemnity option.

Guidance

If a type of coverage is required but is excluded by the property insurance policy (e.g., ordinance or law), and the BorrowerBorrowerPerson who is the obligor per the Note. purchases the coverage separately, or adds it to the property insurance policy, you should confirm that business income insurance is also provided for the covered peril in order to satisfy the requirement.

501.02C

Ordinance or Law Insurance

Requirements

Each PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). that is non-conforming under any current land use law or was constructed 25 years or more before closing must have ordinance or law insurance.  In this case, the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). must have:

  • Coverage A:  Loss of Undamaged Portion, in an amount equal to
    • 100% of the insurable value of the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , less the damage threshold specified by the local building ordinance, or
    • 50% of the insurable value, if the local ordinance does not specify a threshold;
  • Coverage B:  Demolition/Debris Removal Cost, in a minimum amount of 10% of the insurable value of the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). ; and
  • Coverage C:  Increased Cost of Construction, in a minimum amount of 10% of the insurable value of the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). .

Guidance

A PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). is non-conforming if it cannot be rebuilt "as is" under current law.  Examples of land use laws include building, zoning, energy management, green, and similar ordinances.

Rebuilding "as is" refers to the ability to build the same square footage within the same building footprint without increasing the non-conformity, as defined by the local ordinance.  You should determine the feasibility of rebuilding within any time frame required by the ordinance.

Ordinance and law insurance is needed for an older PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , even if it is legally conforming under current zoning law, because the cost of construction will likely be significantly higher due to changes in building codes and construction requirements.

For example:

  • When a PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). has an insurable value of $10 million and the damage threshold of the local building ordinance is 75%, $2.5 million is the amount of coverage required for Coverage A.  If A, B, and C are combined, then the required amount is $2.5 million plus $2 million, or $4.5 million total.
  • When Coverages A, B, and C are combined, the minimum limit is the Coverage A amount plus 20% of the insurable value of the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). .
  • When Coverages B and C are combined, the minimum limit is 20% of the insurable value of the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). .

PropertiesPropertiesMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). that closed before February 3, 2014 are not required to have ordinance or law coverage if they are Legal Conforming and have a build date of 25 years or more before closing.

501.02D

Boiler and Machinery / Equipment / Mechanical Breakdown Insurance

Requirements

Each PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). located in a state that regulates centralized HVAC boiler, water heater, or other high-pressure vessels must have boiler and machinery insurance if it has such equipment.

The coverage amount must be at least 100% of the insurable value of each building that houses the equipment.

501.02E

Builder’s Risk Insurance

Requirements

If property insurance coverage is excluded during construction or significant renovation or restoration, the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). must have builder’s risk insurance during such activity.

The coverage amount must be at least 100% of the completed value, on a non-reporting basis.

501.02F

Fidelity Bond / Crime Insurance

Requirements

Each PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). owned by a Cooperative OrganizationCooperative OrganizationCorporation or legal entity where each shareholder or equity owner is granted the right to occupy a unit in a multifamily residential property under a proprietary lease or occupancy agreement. must have fidelity bond/crime insurance in an amount covering scheduled Cooperative Maintenance FeesCooperative Maintenance FeesPeriodic fee assessed each shareholder or owner of a Cooperative Organization to fund costs and expenses associated with ongoing operations of the Cooperative Property. for at least 3 months.

The deductible for fidelity bond/crime insurance may not exceed $25,000.

501.02G

Regional Perils Insurance

Requirements

If a PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). is in an area prone to geological phenomena, the property insurance coverage must include those phenomena.

The coverage amount must be 100% of the insurable value.

Guidance

Examples of geological phenomena include sinkhole, mine subsidence, volcanic eruption, and avalanche.

501.03

Catastrophic Risk Insurance
501.03A

Generally

Requirements

If a PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). is in an area prone to Catastrophic EventsCatastrophic EventsNatural or man-made hazard resulting in an event of substantial extent causing significant physical damage or destruction, loss of life, or drastic change to the natural environment, such as earthquake, flood, terrorist attack, or windstorm. , it must have the coverages required by this Section 501.03.

501.03B

Windstorm Insurance

Requirements

The PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). must have separate windstorm insurance if the Special Causes of Loss Form excludes any type of wind-related Catastrophic EventCatastrophic EventNatural or man-made hazard resulting in an event of substantial extent causing significant physical damage or destruction, loss of life, or drastic change to the natural environment, such as earthquake, flood, terrorist attack, or windstorm. .

The coverage amount must be at least 100% of the insurable value.  This valuation may not rely solely on Probable Maximum Loss (PML) calculations.

The deductible amount may not exceed the greater of

Guidance

A state insurance plan, state-managed windstorm, or beach erosion insurance pool is acceptable for catastrophic windstorm coverage (i.e., not for non-catastrophic windstorm or other perils), if no other catastrophic windstorm coverage is available.

501.03C

Flood Insurance

Requirements

The PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). must have flood insurance if any income-producing ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). or any non-income producing ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). that support amenities are located in an SFHASFHASpecial Flood Hazard Area designated by FEMA. Zone A or Zone V.

The coverage amount must be 100% of the insurable value of

  • the first 2 floors above grade and any ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). below grade, plus
  • all Fixtures and Goods located on the first 2 floors above grade and/or below grade (as defined in the Security InstrumentSecurity InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the Loan Document obligations. ).

The deductible amount may not exceed the greater of

If the coverage available under the NFIPNFIPProgram of flood insurance coverage and floodplain management administered under the National Flood Insurance Act. is not sufficient to meet the requirements set forth above, then the BorrowerBorrowerPerson who is the obligor per the Note. must have excess flood insurance or difference in conditions (DIC) insurance that either

  • covers the difference, up to the required coverage amount, or
  • if the required coverage amount is not economically feasible, covers an amount that you determine is reasonable, given the exposure.

During the Letter of Map Amendment (LoMA) process only NFIPNFIPProgram of flood insurance coverage and floodplain management administered under the National Flood Insurance Act. insurance is required.  The maximum term for NFIPNFIPProgram of flood insurance coverage and floodplain management administered under the National Flood Insurance Act. insurance during the LoMA process is 12 months.

If any ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). are reclassified as within an SFHASFHASpecial Flood Hazard Area designated by FEMA. Zone A or Zone V after you deliver the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. , you must require the BorrowerBorrowerPerson who is the obligor per the Note. to obtain compliant flood insurance.

Guidance

Flood insurance is not required if only unimproved portions of the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , or non-income producing ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). that do not support amenities at the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , are located in an SFHASFHASpecial Flood Hazard Area designated by FEMA. .  ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). that support amenities include structures such as clubhouses and pool houses.  ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). that do not support amenities are structures such as sheds, pump houses, and storage buildings.  Business income insurance is not required for non-income producing ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). . 

Keep in mind that conditions may change over time and flood zones may be remapped.  In certain cases, you or Fannie Mae may require flood insurance for ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). outside of an SFHASFHASpecial Flood Hazard Area designated by FEMA. Zone A or V, but within an area designated by FEMAFEMAFederal Emergency Management Agency as Zone X or Zone D (for example, if a PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). is in an area subject to flooding due to storm water, or within close proximity to an SFHASFHASpecial Flood Hazard Area designated by FEMA. boundary).

When determining whether excess flood insurance or DIC insurance is economically feasible, you may consider a DSCRDSCROn an annual basis or any specified period, the ratio of Net Cash Flow to the total of:  principal, interest, and required Mezzanine Financing or Hard Preferred Equity payments. reduction of 10 or more basis points as a reasonable measure or guide. 

Before determining a lesser amount of excess flood insurance or DIC Insurance, or not requiring such coverage, you should have the BorrowerBorrowerPerson who is the obligor per the Note. provide you with at least 3 quotes or declination letters, and determine whether the BorrowerBorrowerPerson who is the obligor per the Note. is attempting to avoid purchasing coverage by applying to companies that do not write flood insurance or give artificially high quotes.  If you are provided with a combination of quotes and declinations, quotes should be used to determine feasibility of coverage, and a limit of coverage that is economically feasible should be secured.

An acceptable deductible for DIC insurance is the coverage limit of the underlying NFIPNFIPProgram of flood insurance coverage and floodplain management administered under the National Flood Insurance Act. policy. 

You should obtain flood zone determinations from qualified third-party flood-zone determination firms, and exercise care and sound judgment when selecting the firm.  You should require the determination firm, and any monitoring company (if different), to

  • notify you whenever flood insurance is or becomes required, and
  • continue monitoring after any servicing transfer.

Operating Procedures

You must obtain life-of-loan monitoring for each PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). from a third-party flood-zone determination firm.

You are required to complete the most recent version of the Standard Flood Hazard Determination form issued by FEMAFEMAFederal Emergency Management Agency to determine whether any of the ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). are located in an SFHASFHASpecial Flood Hazard Area designated by FEMA. .  You must keep a completed copy of this form in your Servicing FileServicing FileYour file for each Mortgage Loan serviced. , including a signed copy of the Notice to Borrower of Special Flood Hazard and Federal Assistance (included in the Flood Determination Certificate). 

If you permitted a reduction in the amount of excess flood insurance or DIC insurance, your analysis and related documentation supporting the economic feasibility and the amount of the reduction must be

  • included in your Servicing FileServicing FileYour file for each Mortgage Loan serviced. , and
  • submitted via the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, requested modifications, asset management reports, and data corrections for loan or property attributes. .
501.03D

Earthquake Insurance

Requirements

The PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). must have earthquake insurance if required by Fannie Mae based on the Seismic Risk Assessment.

The coverage amount must be at least 100% of the insurable value.

The deductible amount may not exceed the greater of

501.03E

Terrorism Insurance

Requirements

Each PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). must have terrorism insurance for property damage/casualty and liability exposures, unless

  • it secures a Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. with a UPBUPBUnpaid Principal Balance of less than $25 million, and
  • you performed a risk assessment, and it indicated no or low terrorism risk.

The coverage amount must be at least 100% of the insurable value of the ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). .

The deductible amount may not exceed the greater of

Guidance

Your risk assessment should consider the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). location in relation to potential terrorist targets, such as tourist attractions, mass transportation facilities, urban areas, and government buildings.  You should also consider concentrations of risk and overall exposures.

Operating Procedures

You must retain a copy of your risk assessment in your Servicing FileServicing FileYour file for each Mortgage Loan serviced. .

501.04

Liability Insurance

Requirements

Each PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). and BorrowerBorrowerPerson who is the obligor per the Note. must be covered by liability insurance for bodily injury, PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). damage, and personal injury throughout the term of the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. .

501.04A

Commercial General Liability Insurance

Requirements

The general liability insurance coverage amount must be at least

  • $1 million per occurrence/$2 million general aggregate limit, plus
  • excess/umbrella insurance as follows:

If the number of stories in the building is...

The minimum excess/umbrella insurance coverage is...

1 – 4

$2 million

5 – 10

$5 million

11 – 20

$10 million

Over 20

$25 million

The maximum deductible amount is based on the total insurable values of the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). insurance policy.

If the insurable value is...

The maximum deductible amount per occurrence is...

Less than $5 million

$40,000

Equal to or greater than $5 million, but less than $50 million

$50,000

Equal to or greater than $50 million, but less than $100 million

$125,000

Equal to or greater than $100 million

$275,000

You may satisfy the maximum deductible amounts by any combination of the deductibles on the primary liability insurance and excess/umbrella insurance policies.

The maximum deductibles apply to all liability insurance.

Guidance

You may satisfy the insurance coverage requirements with any combination of primary liability insurance and excess/umbrella insurance coverage, so long as they add up to the sum of the required minimum limits.

You may satisfy the insurance coverage requirements for excess/umbrella insurance when the coverage limit meets the requirement for the location with the most stories.

501.04B

Professional Liability Insurance

Requirements

If any level of healthcare is provided at a Seniors Housing PropertySeniors Housing PropertyMultifamily residential rental property with any combination of Independent Living, Assisted Living, Alzheimer’s/Dementia Care, or Skilled Nursing units. , it must have professional liability insurance covering professional errors and omissions, medical malpractice, and all types of abuse.

The coverage amount must be at least

  • $1 million per occurrence/$2 million general aggregate limit, plus
  • excess/umbrella insurance as follows:

If the number of licensed beds is...

The minimum excess/umbrella insurance coverage is...

1 – 100

$2 million

101 – 500

$5 million

501 – 1,000

$10 million

Over 1,000

$25 million

For a PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). with Assisted LivingAssisted LivingSeniors Housing Property offering services limited to non-medical personal care, including ADL assistance, which are typically licensed and regulated by a state or local governmental authority.  beds, Independent LivingIndependent LivingSeniors Housing providing limited programs of assistance for domestic activities (e.g. meals, housekeeping, activities, transportation, etc.), and typically resembles market rate units. beds are not counted when determining the minimum coverage limit.

When general liability insurance and professional liability insurance coverages are combined under an excess/umbrella insurance policy, the required coverage is the higher minimum limit of the 2 underlying coverages.

The maximum deductible for professional liability insurance must not exceed the applicable maximum amount in Part II, Chapter 5: Property and Liability Insurance, Section 501.04A: Commercial General Liability Insurance.

Guidance

When using a claims-made policy, you should consider whether an adequate “retroactive date” is in place.  A retroactive date provides coverage for acts that took place before a specified date – usually before the effective date of the current policy.  A retroactive date of 3 - 5 years before the current policy’s effective date is common. 

If the BorrowerBorrowerPerson who is the obligor per the Note. changes carriers during the term of the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. , the addition of tail coverage or an extended reporting period endorsement, which extends coverage after the cancellation or termination of a claims-made policy, is important.  These provisions help ensure that there is no lapse in coverage.

You may satisfy the insurance coverage requirements with any combination of primary liability insurance and excess/umbrella insurance coverage, as long as they add up to the sum of the required minimum limits.

You may satisfy the insurance coverage requirements for excess/umbrella insurance when the limit meets the requirement for the covered location with the most beds.

501.04C

Risk Retention Groups and Captive Insurance

Requirements

Only a Seniors Housing PropertySeniors Housing PropertyMultifamily residential rental property with any combination of Independent Living, Assisted Living, Alzheimer’s/Dementia Care, or Skilled Nursing units. may use liability insurance from a Risk Retention GroupRisk Retention GroupState-chartered insurance company created by the 1986 federal Liability Risk Retention Act, insuring commercial businesses and government entities against liability risks. or a Captive InsurerCaptive InsurerInsurance company wholly owned and controlled by its insureds, whose primary purpose is to insure the risks of its owners, and its insureds benefit from the captive insurer's underwriting profits. .  Captive Insurance is only acceptable for

  • professional liability insurance, and
  • general liability insurance when combined with professional liability insurance.

Any Risk Retention GroupRisk Retention GroupState-chartered insurance company created by the 1986 federal Liability Risk Retention Act, insuring commercial businesses and government entities against liability risks. or Captive InsurerCaptive InsurerInsurance company wholly owned and controlled by its insureds, whose primary purpose is to insure the risks of its owners, and its insureds benefit from the captive insurer's underwriting profits. must have a rating of at least

  • A- / VI from A.M. Best Company, or
  • A from Demotech, Inc., with policyholder surplus of at least $40 million.

You must get an annual report on the Captive InsurerCaptive InsurerInsurance company wholly owned and controlled by its insureds, whose primary purpose is to insure the risks of its owners, and its insureds benefit from the captive insurer's underwriting profits. from an independent firm that is:

  • familiar with captive domiciles, operations, and insurance structures;
  • experienced analyzing captive actuarial studies and audited financial statements; and
  • unrelated to the Captive InsurerCaptive InsurerInsurance company wholly owned and controlled by its insureds, whose primary purpose is to insure the risks of its owners, and its insureds benefit from the captive insurer's underwriting profits. , you, the BorrowerBorrowerPerson who is the obligor per the Note. , GuarantorGuarantorKey Principal or other Person executing a Payment Guaranty, Non-Recourse Guaranty, or any other Mortgage Loan guaranty. , or any of its sponsors or PrincipalsPrincipalsPerson who owns or controls specified interests in the Borrower per Part I, Chapter 3: Borrower, Guarantor, Key Principals, and Principals, Section 303: Key Principals, Principals, and Guarantors. .

The firm’s report must include:

  • an analysis of the Captive InsurerCaptive InsurerInsurance company wholly owned and controlled by its insureds, whose primary purpose is to insure the risks of its owners, and its insureds benefit from the captive insurer's underwriting profits. ’s annual independent actuarial study;
  • an actuarial memorandum/reserve analysis provided by the Captive InsurerCaptive InsurerInsurance company wholly owned and controlled by its insureds, whose primary purpose is to insure the risks of its owners, and its insureds benefit from the captive insurer's underwriting profits. ;
  • a review of the annual independent audited financial statements for the Captive InsurerCaptive InsurerInsurance company wholly owned and controlled by its insureds, whose primary purpose is to insure the risks of its owners, and its insureds benefit from the captive insurer's underwriting profits. ; and
  • a conclusion regarding the Captive InsurerCaptive InsurerInsurance company wholly owned and controlled by its insureds, whose primary purpose is to insure the risks of its owners, and its insureds benefit from the captive insurer's underwriting profits. ’s operations and financial viability.

Guidance

Captive Insurance and similar arrangements have lower capitalization requirements than traditional insurance companies, and are usually not rated by a recognized rating agency.

In order to be rated, a Captive InsurerCaptive InsurerInsurance company wholly owned and controlled by its insureds, whose primary purpose is to insure the risks of its owners, and its insureds benefit from the captive insurer's underwriting profits. will typically provide the following to a rating provider:

  • detailed updated accrual runs;
  • updated loss history (minimum 5 years, brief summary, and detailed list);
  • current updated audited financial statements for the past 2 years:
    • for the captive, audited financials typically are on a stand-alone basis (if audited are not available, then unaudited financials are acceptable); and
    • for the parent company’s, the financials should be on a consolidated basis;
  • financials, audited or unaudited, from the captive and parent company for the most recent quarter;
  • description of any changes from previous years with applicable updated resumes of all officers;
  • description of any reinsurance and/or fronting company, if applicable;
  • description of internal claims management procedures;
  • status of market update;
  • description of funding sources;
  • business plan;
  • projected volume over the next year;
  • actuarial memorandum/reserve analysis as provided by the Captive InsurerCaptive InsurerInsurance company wholly owned and controlled by its insureds, whose primary purpose is to insure the risks of its owners, and its insureds benefit from the captive insurer's underwriting profits. ;
  • state insurance examination report or, if a report is not available,
    • date of examination,
    • description of any adverse findings, and
    • steps taken to remediate; and
  • exposure to the Captive InsurerCaptive InsurerInsurance company wholly owned and controlled by its insureds, whose primary purpose is to insure the risks of its owners, and its insureds benefit from the captive insurer's underwriting profits. or Risk Retention GroupRisk Retention GroupState-chartered insurance company created by the 1986 federal Liability Risk Retention Act, insuring commercial businesses and government entities against liability risks. , based on the UPBUPBUnpaid Principal Balance of loans made to date.
501.04D

Workers’ Compensation Insurance

Requirements

The PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). must have workers’ compensation and employer’s liability insurance (including terrorism coverage), if required in the state where the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). is located.

The coverage amount must equal or exceed:

  • the statutory limits for injured employees; plus
  • the greater of
    • employer’s liability limits of $1 million per occurrence for bodily injury, $1 million per occurrence and $1 million aggregate for employee disease, or
    • any underlying limit required by the excess/umbrella insurance carrier.
501.04E

Directors’ and Officers’ Liability Insurance

Requirements

Each PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). owned by a Cooperative OrganizationCooperative OrganizationCorporation or legal entity where each shareholder or equity owner is granted the right to occupy a unit in a multifamily residential property under a proprietary lease or occupancy agreement. must have directors’ and officers’ liability insurance.

The coverage amount must be at least $1 million per occurrence.

501.04F

Commercial Auto Liability Insurance

Requirements

The BorrowerBorrowerPerson who is the obligor per the Note. must have commercial auto liability insurance for any motor vehicles that are

  • owned or hired by the BorrowerBorrowerPerson who is the obligor per the Note. , or
  • used by anyone for business on behalf of the BorrowerBorrowerPerson who is the obligor per the Note. or the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). .

The coverage must include personal injury protection required by the state where the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). is located.

The coverage amount must be the greater of

  • $1 million per occurrence, or
  • any underlying limit required by the excess/umbrella insurance carrier.
501.05

Small Loans

Requirements

All insurance requirements of this Chapter apply to Small Mortgage LoansSmall Mortgage LoansMortgage Loan with an original loan amount less than or equal to $9 million. , except as noted in this Section.

501.05A

Permanent Evidence

Guidance

If you are unable to obtain the original or a duplicate copy of the insurance policy or the MBAMBAMortgage Bankers Association Evidence of Insurance, the Borrower’sBorrower’sPerson who is the obligor per the Note. insurance agent or broker may deliver a written statement that it has reviewed the policy and confirmed that it meets the following requirements:

  • Named insured is listed as Fannie Mae and the BorrowerBorrowerPerson who is the obligor per the Note. .
  • Mortgagee Clause meets Fannie Mae's requirements.
  • Each insurance carrier has a compliant A.M. Best Company or Demotech, Inc. rating.
  • Policy term is 12 months.
  • Cancellation Clause meets Fannie Mae's requirements.
  • Special Coverage Form applies.
  • No Coinsurance or, if there is Coinsurance, an Agreed Value Endorsement is attached to the policy.
  • Limits of insurance are included for all required coverages, including any sub-limits or other restrictions (such as catastrophic limits) that may differ from the standard coverage amount.
  • A Statement of Values is included where applicable.
  • Coverage is subject to ReplacementReplacementCapital item replacements and major maintenance needs identified by the Property Condition Assessment or otherwise required. Cost valuation.
501.05B

Excess/Umbrella Insurance

Requirements

The minimum excess/umbrella insurance is $1 million if

  • no building on the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). has more than 4 stories, and
  • the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. has a UPBUPBUnpaid Principal Balance of $3 million or less.
501.05C

Terrorism Insurance

Guidance

Terrorism insurance is not required for Small Mortgage LoansSmall Mortgage LoansMortgage Loan with an original loan amount less than or equal to $9 million. .