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

As of the Mortgage Loan Origination DateMortgage Loan Origination DateDate you fund a Mortgage Loan to the Borrower. , you must ensure 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). is covered by compliant property insurance and liability insurance.

You must ensure all insurance policies:

list the BorrowerBorrowerPerson who is the obligor per the Note. as a named insured;
are written on an Occurrence-Based Policy, except the following, which may be written on an Occurrence-Based Policy or a Claims-Made Policy:
- earthquake insurance;
- directors' and officers' insurance;
- professional liability insurance; and
- general liability insurance for Seniors Housing PropertiesSeniors Housing PropertiesMultifamily residential rental property with any combination of Independent Living, Assisted Living, Alzheimer’s/Dementia Care, or Skilled Nursing units. only when combined with professional liability insurance;
unless the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. expressly state otherwise, require the carrier to notify the named 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;
except for professional liability insurance, name:
- Fannie Mae as Additional Insured on
  - general liability insurance, and
  - excess/umbrella insurance; and
- "Fannie Mae, its successors, and assigns" as Mortgagee and Loss Payee on property insurance; and
use Replacement Cost Basis; however, coverage for roofs may use
- Actual Cash Basis, or
- Replacement Cost Basis.

Guidance

You should:

obtain the advance cancellation notice for the benefit of each Mortgagee and Additional Insured from the insurance carriers whenever possible; or
if the insurer will not provide advance cancellation notices, ensure the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. were not modified in any manner limiting:
- the Borrower’sBorrower’sPerson who is the obligor per the Note. obligation to promptly inform you 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. for failing to maintain all insurance coverages required by the
  - Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. , and
  - GuideGuideMultifamily Selling and Servicing Guide controlling all Lender and Servicer requirements unless a Lender Contract specifies otherwise. .

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). management company provides insurance, you should confirm the BorrowerBorrowerPerson who is the obligor per the Note. is listed as an Additional Named Insured on the applicable policies.

An acceptable mortgagee clause is:

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 the insurer will not provide advance cancellation notices, your Servicing FileServicing FileYour file for each Mortgage Loan serviced. must include

evidence of your attempts to obtain the notice provisions, and
a copy of the state statute regarding cancelation notification.

501.01B	Insurable Value Determination

Requirements

You must use reliable sources to determine estimated Insurable ValueInsurable ValueFor any Property, the estimate of the maximum dollar amount needed to replace, repair, or reproduce the Property, but excluding any land value. .

Guidance

Common Reliable Sources to Determine Estimated Insurable Value
Resource	Description
Insurance Company Estimate	An estimate from the insurance company underwriting the property damage insurance.
Appraisal's Insurable Value	A qualified commercial real estate AppraisalAppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. from an AppraiserAppraiserPerson engaged to estimate a Property’s market value per USPAP. experienced in the market per Part II, Chapter 2: Valuation and Income, Section 202: Appraisal and Valuation.
Contractor	A reputable commercial contractor with experience constructing and/or reconstructing similar area properties.
Vendor	A third-party vendor who specializes in Insurable ValueInsurable ValueFor any Property, the estimate of the maximum dollar amount needed to replace, repair, or reproduce the Property, but excluding any land value. calculations, or publishes data used to determine Insurable ValueInsurable ValueFor any Property, the estimate of the maximum dollar amount needed to replace, repair, or reproduce the Property, but excluding any land value. .

501.01C	Blanket and Other Policies Covering Multiple Properties

Requirements

You must ensure:

any Blanket PolicyBlanket PolicyInsurance policy providing coverage for multiple properties and/or multiple perils. coverage is as good as, or better than, a single property insurance policy; and
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 listed and identified in the
- policy, or
- associated schedules.

Guidance

A Schedule of Values is a list of insurable values (all elements of the Total Insurable ValueTotal Insurable ValueFor any Property, the sum of the full value of the insured's: covered Property; Property-related business income values; and any other covered Property interests. ) the BorrowerBorrowerPerson who is the obligor per the Note. provides to an insurance company for all properties covered under a property insurance policy.

You should:

review and analyze the Schedule of Values and geographical concentration and/or aggregated values of PropertiesPropertiesMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). /Total Insurable ValuesTotal Insurable ValuesFor any Property, the sum of the full value of the insured's: covered Property; Property-related business income values; and any other covered Property interests. under the Blanket PolicyBlanket PolicyInsurance policy providing coverage for multiple properties and/or multiple perils. ; and.
confirm that Blanket Insurance Limits:
- are limited to a 1 per occurrence shared limit for:
  - more than 1 property;
  - more than 1 category of coverage; or
  - both;
- will be reinstated to the pre-loss limits after a casualty; and
- are sufficient to cover the largest Total Insurable ValueTotal Insurable ValueFor any Property, the sum of the full value of the insured's: covered Property; Property-related business income values; and any other covered Property interests. .

Operating Procedures

You must

clearly document your analysis of any Blanket PolicyBlanket PolicyInsurance policy providing coverage for multiple properties and/or multiple perils. (related or unrelated entities) in your Servicing FileServicing FileYour file for each Mortgage Loan serviced. , and
include supported conclusions.

501.01D	Risk Retention Groups and Captive Insurance

Requirements

You must ensure 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. has a rating of at least A- / VII from A.M. Best Company.

For 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. that is not satisfactorily rated, before Rate LockRate LockAgreement between you and the Investor containing the terms of the Lender-Arranged Sale or Multifamily Trading Desk trade of the Mortgage Loan and the MBS terms and conditions relating to the underlying MBS, if applicable, which may be documented via a recorded telephone conversation. , you must:

obtain and review the applicable information in the Unrated Risk Retention Group or Captive Insurer table; and
submit a
- written summary, and
- recommendation for approval, explaining
  - any non-compliant requirements,
  - any adverse findings, and
  - your rationale for recommending approval.

Unrated Risk Retention Group or Captive Insurer
Document/Entity	Description
Certificate of Authority (CA)	State-issued license to an insurance company to conduct business, and includes the date of authority, complete 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. name, and state of domicile.
State Examination Report	Report covering a specific timeframe that: reviews the company's: balance sheet (including assets, liabilities, capital, and surplus); statement of income; investments; premiums; reinsurance assumed and ceded; unpaid losses and loss adjustment expense; and losses and loss adjustment expense incurred; and ascertains its: financial condition; ability to fulfill obligations; and compliance with applicable state laws and regulations.
Actuarial Report	Report culminating with a statement of actuarial opinion (minimum requirement) after evaluating, opining, and certifying the adequacy of the Captive Insurer'sCaptive Insurer'sInsurance 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. open and paid losses, loss adjustment expense reserves, capital, and surplus.
Loss History	Frequency and severity of insurance losses covered by the Captive Insurer'sCaptive Insurer'sInsurance 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. policy during a specific timeframe.
Reinsurance and/or Fronting Company	Reinsurance is when an insurer transfers all or part of a risk to another insurer to reduce the risk for the first insurance. Fronting company is using a licensed, admitted insurer to issue an insurance policy on behalf of a self-insured organization 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. without intending to transfer any of the risk. The risk of loss is retained by the self-insured 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. with an indemnity or reinsurance agreement.
Captive Insurer	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. is either a: single parent captive (pure captive) - when an insurance subsidiary insures the loss exposures of its parent company or single entity; or group captive – a captive owned by several different companies who are normally from the same industry, and have similar risks.

Guidance

Captive InsurersCaptive InsurersInsurance 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 similar arrangements):

may have lower capitalization requirements than traditional insurance companies; and
are not usually rated by a recognized rating agency.

For Captive InsurersCaptive InsurersInsurance 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 should:

confirm they
- are financially stable, and
- have adequate funds to cover potential losses; and
review additional documents as warranted.

Operating Procedures

You must submit all documents for unrated Captive InsurersCaptive InsurersInsurance 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 GroupsRisk Retention GroupsState-chartered insurance company created by the 1986 federal Liability Risk Retention Act, insuring commercial businesses and government entities against liability risks. :

through DUS GatewayDUS GatewayMultifamily pre-acquisition system, or any successor systems, recording deal registration, Pre-Review and/or waiver tracking, Mortgage Loan Commitments, and decision records. , for new 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. submissions; and
annually 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. , for Portfolio Mortgage LoansPortfolio Mortgage LoansMortgage Loan purchased by Fannie Mae and held as of a certain date regardless of whether it is a Cash Mortgage Loan or an MBS Mortgage Loan. .

501.01E	Insurance Carrier Rating

Requirements

Rating requirements do not apply to policies issued

through State-sponsored insurance programs, or
by insurers participating in NFIPNFIPProgram of flood insurance coverage and floodplain management administered under the National Flood Insurance Act. .

For a new policy, you must ensure the insurance carrier has an A.M. Best Company

general policyholder rating of A- or better, and
financial size category of VII or better.

Guidance

A new policy is one that is

not already in force, and
most common for an AcquisitionAcquisitionAny Purchase of either the: Property’s fee simple or leasehold interest via a deed transfer; or Controlling Interest in the Borrower. .

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 Borrower'sBorrower'sPerson who is the obligor per the Note. already-in-place policy.

501.01F	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 the:

shorter term is due to carrier
- non-renewal, or
- cancellation; or
policy is
- expiring, and
- will be renewed for at least 12 months.

501.01G	Payment of Premium

Requirements

You must:

ensure premiums for all required insurance policies are either:
- paid in full annually; or
- payable in installments, for which you have receipts confirming timely payment;
not provide premium financing to the BorrowerBorrowerPerson who is the obligor per the Note. ; and
only permit third-party premium financing 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; and
- the Modifications to Multifamily Loan and Security Agreement (Financing of Insurance Premiums) (Form 6272) was executed.

If the BorrowerBorrowerPerson who is the obligor per the Note. finances premiums, you must

review the financing agreement,
confirm timely payment of each premium was made, and
retain in the Servicing file
- the financing agreement, and
- evidence of premium payments.

501.01H	Evidence of Insurance

Requirements

You must have:

temporary or permanent evidence of insurance when 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. closes; and
permanent evidence of insurance within 90 days after 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. DeliveryDeliverySubmission of all correct, accurate, and certifiable documents, data, and information with all applicable documents properly completed, executed, and recorded as needed, and any deficiencies resolved to Fannie Mae’s satisfaction. .

Guidance

Acceptable Evidence of Insurance
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. If an ACORD certificate is unavailable, a joint letter from the Borrower and its licensed insurance broker/agent certifying that all coverages, terms, and conditions meet the requirements. For NFIP flood insurance: the Policy Declaration page; or a copy of the signed application and proof of payment.	An original or duplicate copy of the insurance policy. 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). 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 : less than or equal to $10 million, the MBAMBAMortgage Bankers Association Evidence of Insurance - Commercial Property Form; or greater than $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; state that all policies follow the same terms, conditions, and exclusions as the primary policy, with any differences specified; and for NFIPNFIPProgram of flood insurance coverage and floodplain management administered under the National Flood Insurance Act. flood insurance, include the Policy Declaration page.

Acceptable Evidence of Insurance

Acceptable Temporary Evidence Forms

Acceptable Permanent Evidence Forms

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.
If an ACORD certificate is unavailable, a joint letter from the Borrower and its licensed insurance broker/agent certifying that all coverages, terms, and conditions meet the requirements.
For NFIP flood insurance:
- the Policy Declaration page; or
- a copy of the signed application and proof of payment.

An original or duplicate copy of the insurance policy.
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). 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 :
- less than or equal to $10 million, the MBAMBAMortgage Bankers Association Evidence of Insurance - Commercial Property Form; or
- greater than $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;
  - state that all policies follow the same terms, conditions, and exclusions as the primary policy, with any differences specified; and
  - for NFIPNFIPProgram of flood insurance coverage and floodplain management administered under the National Flood Insurance Act. flood insurance, include 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.

501.01I	Insurance Exceptions

Requirements

Post-closing exception request submissions must include current information.

All exceptions, including those delegated, must be documented in the applicable business application.

You must submit any insurance exception request:

through DUS GatewayDUS GatewayMultifamily pre-acquisition system, or any successor systems, recording deal registration, Pre-Review and/or waiver tracking, Mortgage Loan Commitments, and decision records. with all applicable data fields completed in the system, not via an attached waiver document;
at least 72 hours before Rate LockRate LockAgreement between you and the Investor containing the terms of the Lender-Arranged Sale or Multifamily Trading Desk trade of the Mortgage Loan and the MBS terms and conditions relating to the underlying MBS, if applicable, which may be documented via a recorded telephone conversation. ; and
with all supporting documentation.

Guidance

If the waiver is approved for the entire 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. term, it will be stated in the approval.