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. .