Servicing Guide

Published June 13, 2018

B-3-02: Flood Insurance Requirements for Mortgage Loans Secured by a One- to Four-Unit Property (08/12/2015)

This topic contains the following:

Determining Minimum Coverage Amounts

The minimum amount of flood insurance required is the lesser of

  • 100% of the replacement cost of the insurable value of the improvements,

  • the maximum insurance available from the NFIP, or

  • the UPB of the mortgage loan (or, if a second lien mortgage loan, the combined UPB of the first lien and second lien mortgage loans).

If Fannie Mae does not have an interest in the first lien mortgage loan and the property securing a second lien mortgage loan is not covered by a flood insurance policy because the holder of the first lien mortgage loan did not require flood insurance coverage, the servicer must require the borrower to obtain a flood insurance policy with coverage in the amount of the lesser of

  • the UPB of all property liens, or

  • the maximum coverage available under the NFIP.

Named Insured and Mortgagee Clause Requirements

See Named Insured and Mortgagee Clause Requirements in B-2-02, Property Insurance Requirements for Mortgage Loans Secured by a One- to Four-Unit Property for information on the required mortgagee clauses for flood insurance.

Related Announcements

The following table provides references to Announcements that are related to this topic.

Announcements Issue Date
Announcement SVC–2015–11 August 12, 2015