B-3-01: Flood Insurance Requirements Applicable to All Property Types (08/12/2015)

© Fannie Mae Single Family Servicing Guide

This topic contains the following:

• Servicer Responsibilities Related to Flood Insurance
• Determining If a Property Requires Flood Insurance
• Properties Located in the Coastal Barrier Resources System or Otherwise Protected Area
• Communities that Participate in the Emergency Program of the NFIP
• Requirements When a Property’s Flood Zone Status Changes
• Acceptable Flood Insurance Policies
• Maximum Allowable Deductible Requirements

Servicer Responsibilities Related to Flood Insurance

The following table outlines the servicer’s responsibilities for the maintenance of flood insurance.

Determining If a Property Requires Flood Insurance

Flood insurance coverage is required when a mortgage loan is secured by a property located in an SFHA. The following table describes how to evaluate a property to determine if flood insurance is required.

Properties Located in the Coastal Barrier Resources System or Otherwise Protected Area

If a property securing a mortgage loan is located within the Coastal Barrier Resource System or is within an Otherwise Protected Area, flood insurance is required. If the property is not eligible for federal flood insurance, private flood insurance is acceptable.

The flood insurance carrier must meet Fannie Mae’s minimum rating requirements as specified in Property Insurance Carrier Rating Requirements in B-2-01, Property Insurance Requirements Applicable to All Property Types (11/12/2014). The amount of the flood insurance required and the deductible amount must adhere to Fannie Mae’s flood insurance requirements based on the property type.

Communities that Participate in the Emergency Program of the NFIP

For communities that participate in the Emergency Program of the NFIP, the borrower must obtain private insurance or a supplemental private policy in conjunction with an NFIP Emergency Program policy that fully meets Fannie Mae’s flood insurance coverage requirements in situations where the NFIP Emergency Program only provides limited coverage.

Requirements When a Property’s Flood Zone Status Changes

When a property is remapped into an SFHA, the servicer must take the action described in the following table.

The servicer must follow the procedures in General Expense Reimbursement Requirements in F-1-05, Expense Reimbursement (08/15/2018) for information related to flood insurance premium reimbursement.

When a property is remapped out of an SFHA, the servicer must not require flood insurance. If the borrower provides a letter from FEMA stating the structure is no longer in an SFHA and requests that the flood insurance be cancelled, the servicer must

• cancel the flood insurance, and
• maintain a copy of the letter from FEMA in the individual mortgage loan file.

Acceptable Flood Insurance Policies

Flood insurance must be in one of the following forms:

• a standard policy issued under the NFIP,
• a policy that meets NFIP requirements, such as those issued by licensed property and casualty insurance companies authorized to participate in the NFIP’s “Write Your Own” program; or
• a policy issued by a private insurer as long as
  • the terms and amount of coverage are at least equal to that provided under an NFIP policy, and
  • the insurer meets Fannie Mae’s rating requirements as specified in Property Insurance Carrier Rating Requirementsin B-2-01, Property Insurance Requirements Applicable to All Property Types (11/12/2014).

A Policy Declaration page is acceptable evidence of flood insurance.

Maximum Allowable Deductible Requirements

The deductible must be no greater than the NFIP maximums based on the property type.