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Fannie Mae Servicing Guide Announcement SVC-2013-27: Lender-Placed Insurance Requirements

Servicing Guide Announcement SVC-2013-27

December 18, 2013

(*With Corrections on Page 1)


Lender-Placed Insurance Requirements

Fannie Mae is updating its requirements for lender-placed insurance (also known as “force-placed” insurance) as defined by the Consumer Financial Protection Bureau in 12 C.F.R. Section 1024.37 for all Fannie Mae mortgage loans including reverse mortgage loans for the following:

  • Acceptable lender-placed insurance costs
  • Acceptable lender-placed insurance carriers, and
  • Lender-placed insurance compliance certification



Effective Date

Servicers are encouraged to implement the requirements in this Announcement immediately; however, these changes are effective for new or renewed lender-placed insurance policies issued on a property secured by a Fannie Mae mortgage loan on or after June 1, 2014. Servicers must ensure that their master agreements and/or master policies with their lender-placed insurance provider comply with the requirements in this Announcement by June 1, 2014.



Acceptable Lender-Placed Insurance Costs

Servicing Guide, Part II, Chapter 6: Lender-Placed Property Insurance

Fannie Mae is now requiring that the lender-placed insurance premiums charged to the borrower or reimbursed by Fannie Mae must exclude any lender-placed insurance commission or payments earned or received by the servicer, or other entities or individuals affiliated with the servicer (employees, agents, brokers, etc.).  (*Updated paragraph).


The prohibited lender-placed insurance commissions or payments include any incentive-based compensation regardless of its designation as commission, bonus, fees, or other types of payments from the servicer’s lender-placed insurance carrier, for example, underwriting bonuses or other payments based on insurance loss ratios.


An affiliated entity is defined as

  • an entity owned or controlled, in whole or in part, by the servicer including, but not limited to, a subsidiary or joint venture of the servicer;
  • an entity that owns or controls, in whole or in part, the servicer (for example, the parent company of the servicer); or
  • an entity that is under common ownership or control with the servicer (for example, two subsidiaries of the same parent company).


An affiliated entity does not include a publicly traded company where the servicer owns less than 5% of its stock.


Please click here to view the online Announcement in its entirety