501.01C

Insurance Carrier Rating

Requirements

All property and liability insurance carriers for new policies must have:

  • an A.M. Best Company general policyholder's rating of A– or better; and
  • a financial performance index rating of VI or better.

For any existing insurance policy (at origination or thereafter), the carrier must have an A.M. Best rating of B++ or better, and must comply with the rating requirement for new policies at renewal.

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 property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in 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.

If a carrier of an existing policy is downgraded below B++, you must, as provided by the Loan DocumentsLoan DocumentsAll documents evidencing, securing, or guaranteeing the debt obligation executed for a Mortgage Loan and approved by Fannie Mae. , require the BorrowerBorrowerPerson who is the obligor under the Note. to immediately obtain replacement coverage with a compliant carrier, even if the policy has not yet expired.

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 property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code). is added to a policy that the BorrowerBorrowerPerson who is the obligor under the Note. already has in force.

Operating Procedures

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