Freddie Mac Single-Family Seller/Servicer Guide Section 8202.2 — Flood insurance requirements

Freddie Mac Single-Family Seller/Servicer Guide Section 8202.2 — Flood insurance requirements

8202.2: Flood insurance requirements (07/09/25) For each Freddie Mac-owned Mortgage it services, the Servicer must have policies and controls in place to ensure that the Mortgaged Premises, when required, has and maintains flood insurance coverage that meets the minimum requirements outlined in Section 4703.3. The Servicer must have policies, procedures and controls in place to ensure the property is adequately protected by flood insurance when required, with no lapses in coverage, and the flood insurance premiums are paid. If at any time during the term of the Mortgage the Mortgaged Premises is not covered by flood insurance in the amount and with the deductible required, the Servicer must follow the Lender-Placed Insurance (LPI) process under Section 8202.6. The Servicer must have policies, procedures and controls in place to identify any map change that becomes effective on or after April 1, 1995 and determine which insurable improvements on Mortgaged Premises in the community affected by the map change become located in a Special Flood Hazard Area (SFHA) and are required to have flood insurance. Flood insurance required under these provisions must be obtained within 120 days of the effective date of the map change. If the area where the Mortgaged Premises is located is an SFHA but the community has become a nonparticipating community and flood insurance provided by the National Flood Insurance Program will not be renewed for that community, the Servicer must require the Borrower to obtain private flood insurance. If the additional coverage cannot be obtained, the Servicer must immediately make appropriate recommendations to Freddie Mac (see Directory 5). 8202.3: Liability and fidelity or employee dishonesty insurance for Condominium Projects and Cooperative Projects (07/09/25) This section contains requirements related to: ■ Liability insurance for Condominium Projects and Cooperative Projects ■ Fidelity or employee dishonesty insurance for Condominium Projects and Cooperative Projects (a) Liability insurance for Condominium Projects and Cooperative Projects Servicers must have policies and controls in place to ensure that the liability insurance coverage for Condominium Projects and Cooperative Projects meets the minimum requirements outlined in Section 4703.5. Freddie Mac Single-Family Seller/Servicer Guide Chapter 8202 As of 05/06/26 Page 8202-6 (b) Fidelity or employee dishonesty insurance for Condominium Projects and Cooperative Projects Servicers must have policies and controls in place to ensure that the fidelity or employee dishonesty insurance coverage for Condominium Projects and Cooperative Projects meets the minimum requirements outlined in Section 4703.5. 8202.4: Evidence of insurance coverage requirements (07/09/25) This section contains information related to: ■ Required evidence of insurance coverage ■ Insurance policies for Condominiums Projects and Cooperative Projects, including master or blanket coverage (a) Required evidence of insurance coverage For each property securing a Mortgage owned by Freddie Mac, the Servicer must maintain evidence of all required insurance coverages in one of the following forms: ■ An original policy (including the Planned Unit Development (PUD) or condominium homeowners association, Cooperative Corporation or fee simple landowner/lessor’s policy under which the required coverages may be provided in whole or in part) and applicable endorsements ■ A copy of the original policy and applicable endorsements if the copy meets the requirements of Chapter 3302 ■ A certificate, evidence or declarations of insurance showing at least the following information: ❑ Name insured and mortgagee (where applicable, PUD or condominium homeowners association, Cooperative Corporation, fee simple landowner/lessor and PUD, or Condominium Unit, Cooperative Unit or ground lease community mortgagee for all units in which the mortgagee has an insurable interest) ❑ Property address ❑ Type, amount and effective dates of coverage ❑ Deductible amount and coverage to which each such deductible applies Freddie Mac Single-Family Seller/Servicer Guide Chapter 8202 As of 05/06/26 Page 8202-7 ❑ Any endorsement or optional coverage obtained and made part of the original policy ❑ Insurer’s agreement to provide at least 10 days’ notice to the mortgagee (including any applicable PUD or Condominium Unit or ground lease community leasehold mortgagee) before any reduction in coverage or cancelation of the policy; or for Cooperative Projects, 30 days’ notice to the mortgagee before cancelation ❑ Signature of an authorized representative of the insurer, if required by law The Servicer must maintain a specimen of each policy and endorsement for which a certificate, evidence or declarations of insurance is maintained in lieu of the policy and endorsement. If the Servicer documents and tracks the master or blanket condominium homeowners association or Cooperative Corporation insurance policy maintained by a condominium homeowners association or Cooperative Corporation and can cross-reference to such policy each Condominium Unit Mortgage or Cooperative Share Loan the Servicer services for Freddie Mac in the Condominium Project or Cooperative Project that is covered by such policy, the Servicer need not maintain and track a separate insurance certificate for each such Condominium Unit Mortgage or Cooperative Share Loan. (b) Insurance policies for Condominium Projects and Cooperative Projects, including master or blanket coverage If the Servicer is unable to obtain evidence of insurance for a Borrower’s unit in a Condominium Project, Cooperative Project or a PUD insured under a master or blanket policy, one of the following insurance coverages obtained by the Servicer will meet the evidence of insurance requirements for the Borrower’s unit: ■ A blanket insurance policy carried by the Servicer that provides unit owner coverages as well as loss assessment coverage in the event of an uninsured loss for all Freddie Mac Condominium Unit Mortgages and Mortgages secured by units in a PUD and, if permitted by the Seller’s Purchase Documents, Cooperative Share Loans serviced by the Servicer ■ An agreement with an insurer to issue an insurance policy that provides unit owner coverage as well as loss assessment coverage in the event of an uninsured loss for all Freddie Mac Condominium Unit Mortgages, Mortgages secured by units in a PUD and, if permitted by the Seller’s Purchase Documents, Cooperative Share Loans serviced by the Servicer The blanket insurance policy or an agreement with an insurer to provide unit owner coverage as well as loss assessment coverage must meet the following requirements: ■ Be underwritten by an insurer with a current rating meeting the requirements outlined in Section 4703.1 Freddie Mac Single-Family Seller/Servicer Guide Chapter 8202 As of 05/06/26 Page 8202-8 ■ Provide coverage for the Servicer and/or Freddie Mac ■ Provide for at least 180 days’ written notice to the Servicer and, if applicable, Freddie Mac before canceling or terminating the coverage ■ Be approved by any regulatory authority to which the Servicer is subject, if such approval is required The Servicer must carry Mortgage impairment or mortgagee interest insurance if it elects not to maintain the documentation described above. The Mortgage impairment or mortgagee interest policy must meet the following requirements: ■ Be underwritten by an insurer with a current rating meeting the requirements outlined in Section 4703.1 ■ Provide coverage for the Servicer and/or Freddie Mac ■ Provide coverage in scope and amounts at least equal to those required under Sections 2101.5 and 2101.8 ■ Provide for at least 180 days’ written notice to the Servicer and, if applicable, Freddie Mac before canceling or terminating the coverage ■ Be approved by any regulatory authority to which the Servicer is subject, if such approval is required Having a blanket insurance policy providing unit owners coverage, an agreement with an insurer to provide unit owners coverage, Mortgage impairment or mortgagee interest policy does not relieve the Servicer of any of its Servicing obligations under the Purchase Documents, including the obligations to demonstrate to Freddie Mac that all the minimum insurance coverages required in Chapter 4703 and any other Purchase Document on a property securing a Mortgage serviced for Freddie Mac are indeed in force and to take all remedial actions required in this Chapter 8202 and any other Purchase Document when any such coverage is not in force. In addition to all other remedies of Freddie Mac provided for in the Purchase Documents, the Servicer will indemnify Freddie Mac for any loss Freddie Mac sustains due to the Servicer’s failure to verify that the required insurance is in force on the Mortgaged Premises. The Servicer’s obligation shall in no way be limited to the amount of coverage in force under a Mortgage impairment or mortgagee interest policy. Freddie Mac Single-Family Seller/Servicer Guide Chapter 8202 As of 05/06/26 Page 8202-9 8202.4: Evidence of insurance coverage requirements (Future effective date 01/01/27) This section contains information related to: ■ Required evidence of insurance coverage ■ Insurance policies for Condominiums Projects and Cooperative Projects, including master or blanket coverage (a) Required evidence of insurance coverage For each property securing a Mortgage owned by Freddie Mac, the Servicer must maintain evidence of all required insurance coverages in one of the following forms: ■ An original policy (including the Planned Unit Development (PUD) or condominium homeowners association, Cooperative Corporation or fee simple landowner/lessor’s policy under which the required coverages may be provided in whole or in part) and applicable endorsements ■ A copy of the original policy and applicable endorsements if the copy meets the requirements of Chapter 3302 ■ A certificate, evidence or declarations of insurance showing at least the following information: ❑ Name insured and mortgagee (where applicable, PUD or condominium homeowners association, Cooperative Corporation, fee simple landowner/lessor and PUD, or Condominium Unit, Cooperative Unit or ground lease community mortgagee for all units in which the mortgagee has an insurable interest) ❑ Property address ❑ Type, amount and effective dates of coverage ❑ Deductible amount and coverage to which each such deductible applies ❑ Any endorsement or optional coverage obtained and made part of the original policy ❑ Insurer’s agreement to provide at least 10 days’ notice to the mortgagee (including any applicable PUD or Condominium Unit or ground lease community leasehold mortgagee) before any reduction in coverage or cancelation of the policy; or for Cooperative Projects, 30 days’ notice to the mortgagee before cancelation ❑ Signature of an authorized representative of the insurer, if required by law Freddie Mac Single-Family Seller/Servicer Guide Chapter 8202 As of 05/06/26 Page 8202-10 ■ Electronic data files that provide sufficient information to determine if a policy meets the minimum requirements outlined in Chapter 4703 The Servicer must maintain a specimen of each policy and endorsement for which a certificate, evidence or declarations of insurance is maintained in lieu of the policy and endorsement. Servicers that rely on electronic data files to determine if a policy meets the minimum requirements outlined in Chapter 4703 must have reasonable procedures in place to mitigate risks associated with not maintaining a specimen of each policy and endorsement, certificate, evidence or declarations of insurance. Servicers must provide legible hard copies of the complete insurance policies and proof of premium payments to Freddie Mac upon request. If the Servicer documents and tracks the master or blanket condominium homeowners association or Cooperative Corporation insurance policy maintained by a condominium homeowners association or Cooperative Corporation and can cross-reference to such policy each Condominium Unit Mortgage or Cooperative Share Loan the Servicer services for Freddie Mac in the Condominium Project or Cooperative Project that is covered by such policy, the Servicer need not maintain and track a separate insurance certificate for each such Condominium Unit Mortgage or Cooperative Share Loan. (b) Insurance policies for Condominium Projects and Cooperative Projects, including master or blanket coverage If the Servicer is unable to obtain evidence of insurance for a Borrower’s unit in a Condominium Project, Cooperative Project or a PUD insured under a master or blanket policy, one of the following insurance coverages obtained by the Servicer will meet the evidence of insurance requirements for the Borrower’s unit: ■ A blanket insurance policy carried by the Servicer that provides unit owner coverages as well as loss assessment coverage in the event of an uninsured loss for all Freddie Mac Condominium Unit Mortgages and Mortgages secured by units in a PUD and, if permitted by the Seller’s Purchase Documents, Cooperative Share Loans serviced by the Servicer ■ An agreement with an insurer to issue an insurance policy that provides unit owner coverage as well as loss assessment coverage in the event of an uninsured loss for all Freddie Mac Condominium Unit Mortgages, Mortgages secured by units in a PUD and, if permitted by the Seller’s Purchase Documents, Cooperative Share Loans serviced by the Servicer The blanket insurance policy or an agreement with an insurer to provide unit owner coverage as well as loss assessment coverage must meet the following requirements: Freddie Mac Single-Family Seller/Servicer Guide Chapter 8202 As of 05/06/26 Page 8202-11 ■ Be underwritten by an insurer with a current rating meeting the requirements outlined in Section 4703.1 ■ Provide coverage for the Servicer and/or Freddie Mac ■ Provide for at least 180 days’ written notice to the Servicer and, if applicable, Freddie Mac before canceling or terminating the coverage ■ Be approved by any regulatory authority to which the Servicer is subject, if such approval is required The Servicer must carry Mortgage impairment or mortgagee interest insurance if it elects not to maintain the documentation described above. The Mortgage impairment or mortgagee interest policy must meet the following requirements: ■ Be underwritten by an insurer with a current rating meeting the requirements outlined in Section 4703.1 ■ Provide coverage for the Servicer and/or Freddie Mac ■ Provide coverage in scope and amounts at least equal to those required under Sections 2101.5 and 2101.8 ■ Provide for at least 180 days’ written notice to the Servicer and, if applicable, Freddie Mac before canceling or terminating the coverage ■ Be approved by any regulatory authority to which the Servicer is subject, if such approval is required Having a blanket insurance policy providing unit owners coverage, an agreement with an insurer to provide unit owners coverage, Mortgage impairment or mortgagee interest policy does not relieve the Servicer of any of its Servicing obligations under the Purchase Documents, including the obligations to demonstrate to Freddie Mac that all the minimum insurance coverages required in Chapter 4703 and any other Purchase Document on a property securing a Mortgage serviced for Freddie Mac are indeed in force and to take all remedial actions required in this Chapter 8202 and any other Purchase Document when any such coverage is not in force. In addition to all other remedies of Freddie Mac provided for in the Purchase Documents, the Servicer will indemnify Freddie Mac for any loss Freddie Mac sustains due to the Servicer’s failure to verify that the required insurance is in force on the Mortgaged Premises. The Servicer’s obligation shall in no way be limited to the amount of coverage in force under a Mortgage impairment or mortgagee interest policy. Freddie Mac Single-Family Seller/Servicer Guide Chapter 8202 As of 05/06/26 Page 8202-12 8202.5: Servicer responsibilities to monitor insurance claims and disburse insurance loss proceeds (09/10/25) This section contains requirements related to: ■ Servicer responsibilities for insurance claims ■ Reporting damage to the Mortgaged Premises ■ Disbursing loss proceeds ■ Repair or reconstruction of the Mortgaged Premises ■ Final inspection of the Mortgaged Premises (a) Servicer responsibilities for insurance claims Upon notification of loss or damage to the Mortgaged Premises, the Servicer must monitor and coordinate the claim process with the Borrower and the insurer. The Servicer must take appropriate action to: ■ Verify the extent of the loss or damage ■ Ensure judicious disbursement of insurance proceeds for the necessary repairs ■ Protect the priority of the Mortgage by obtaining, where necessary, waivers of materialman’s or mechanic’s liens ■ Document details concerning the loss or damage, completion of the repairs and disposition of the insurance proceeds in the Mortgage file ■ Prohibit payment of fees out of the insurance loss proceeds to any public adjuster or other third party retained by the Borrower to assist with the recovery of those proceeds unless agreed to by Freddie Mac in writing ■ Refer to Chapter 8403 for additional requirements on Abandoned Properties (as defined in Section 8403.1), distressed properties or properties that pose a Risk of Property Ownership Freddie Mac Single-Family Seller/Servicer Guide Chapter 8202 As of 05/06/26 Page 8202-13 (b) Reporting damage to the Mortgaged Premises The Servicer does not need to submit a report and related recommendations to Freddie Mac unless: ■ The Mortgage is in foreclosure ■ The Mortgaged Premises is abandoned and/or has been acquired by the Servicer through foreclosure or deed-in-lieu of foreclosure. (See Section 9603.1(d)(ii)) for remittance requirements for insurance loss settlements.) ■ The insured improvements have suffered a total or near total loss ■ The insured improvements cannot be rebuilt ■ The Servicer wishes to apply insurance proceeds to the Mortgage debt instead of repairing the property, or ■ Insurance proceeds exceed the amounts required to restore the property to its original condition If any of the above conditions exist, the Servicer must submit the recommendation along with the appropriate documentation to Freddie Mac (see Directory 5) within five Business Days of learning of the situation. (c) Disbursing loss proceeds If a Servicer receives an insurance claim check for contents or living expenses, the Servicer must release the insurance funds to the Borrower without delay. When the Mortgaged Premises has suffered a loss, the Servicer must follow the requirements in the below table for releasing proceeds: Requirements for releasing loss proceeds Insurance loss draft Mortgage current or less than 31 days delinquent at the time of loss Mortgage 31 or more days delinquent at the time of loss Initial loss draft The Servicer may release insurance proceeds up to the greater of: If the proceeds are less than or equal to $5,000, the Servicer may disburse in one payment. Freddie Mac Single-Family Seller/Servicer Guide Chapter 8202 As of 05/06/26 Page 8202-14 Requirements for releasing loss proceeds Insurance loss draft Mortgage current or less than 31 days delinquent at the time of loss Mortgage 31 or more days delinquent at the time of loss ■ $40,000 ■ 33% of insurance proceeds or ■ The amount by which the release funds exceed the sum of the UPB, accrued interest and advances on the Mortgage If the proceeds are greater than $5,000, the Servicer may make an initial disbursement of 25% of the insurance proceeds but no more than the greater of: ■ $10,000 or ■ The amount by which the release funds exceed the sum of the UPB, accrued interest and advances on the Mortgage Additional loss drafts The Servicer may distribute remaining funds based on the repair plan reviewed and approved by the Servicer. The Servicer may distribute remaining funds in increments not to exceed 25% of the insurance loss proceeds. Inspections The Servicer must inspect repairs prior to release of any remaining funds. For Mortgages that were current or less than 31 days delinquent at the time of loss, the Servicer may use either physical/onsite inspections or remote inspections to confirm the progress or completion of repairs at the property. The Servicer may use Borrower-submitted photos and/or video, or conduct Servicer-directed video calls with the Borrower to document the progress or completion of repairs at the property if the Servicer can, when conducting such inspections: ■ Determine the documented repairs are from the location of the property ■ Authenticate when any Borrower-submitted photos or video were taken and that such photos or video were not altered in any way, and ■ Clearly identify the repairs that are being documented and confirm the repairs (a) were completed in accordance with the insurance adjuster’s itemized estimate and the repair plan, and (b) do not affect the safety, soundness or structural integrity of the property or the ability to obtain an occupancy permit Freddie Mac Single-Family Seller/Servicer Guide Chapter 8202 As of 05/06/26 Page 8202-15 Requirements for releasing loss proceeds Insurance loss draft Mortgage current or less than 31 days delinquent at the time of loss Mortgage 31 or more days delinquent at the time of loss For remote inspections conducted by video call with the Borrower, the Servicer must also retain video or photo records of the call that clearly document the Servicer’s compliance with the above requirements. For Mortgages that are more than 31 days delinquent at the time of loss, Servicers must schedule physical inspections to confirm the progress or completion of repairs. Funds payable The Servicer may issue insurance proceeds payable only to the Borrower. A Servicer may unilaterally apply the insurance proceeds to the Mortgage’s unpaid balance only to the extent allowed by applicable law and the Security Instrument. The Borrower, however, may unilaterally decide to have the proceeds applied to the Mortgage’s unpaid balance. If repair or reconstruction of the residence is expected to take more than three months, insurance funds retained by the Servicer pending disbursement for such repair or reconstruction must be maintained in a federally insured account that pays interest to the Borrower. The Servicer may be named as loss payee on insurance drafts and must comply with any applicable law and, where applicable, any requirement of the FHA, VA, RHS or MI. (d) Repair or reconstruction of the Mortgaged Premises In overseeing the repair or reconstruction of damaged or destroyed residences, the Servicer should, to the extent applicable, practicable and required, ascertain that: ■ The contractor chosen by the Borrower to repair or reconstruct the residence is: ❑ Qualified and experienced to perform the types of work contracted ❑ Financially able to complete the repair or reconstruction within scheduled time frames ■ The plans and specifications for the work contracted: Freddie Mac Single-Family Seller/Servicer Guide Chapter 8202 As of 05/06/26 Page 8202-16 ❑ Describe repair or reconstruction that is generally consistent with the damage or destruction suffered by the residence, as reported in the proof of loss filed by the Borrower with the property insurer and as documented by the insurer’s adjuster ❑ Establish a reasonable schedule for completion of each phase of repair or reconstruction ■ The Borrower and the contractor have executed a contract by which they agree to the following: ❑ The contractor will perform the work described in the plans and specifications ❑ The contractor will comply with applicable codes and regulations governing residential repair or reconstruction (including, but not limited to, building codes and zoning, permit and inspection regulations). These codes and regulations may vary from State to State and, within the same State, from county to county. Therefore, Servicers should have adequate measures in place to verify contractors’ and inspectors’ compliance certifications to protect Freddie Mac’s and the Servicer’s respective investments. If additional funds are needed to bring a damaged or destroyed residence into compliance with applicable codes and regulations, the Borrowers should determine whether their property insurer will waive any policy provision restricting payment for the increased cost of construction resulting from enforcement of codes and regulations. ❑ A specified dollar amount is the maximum amount that the contractor may charge for the work ❑ The contractor will be paid a specified advance (if applicable, usually not exceeding 10% of the total contract amount) and, subsequently, on a specified draw schedule contingent on verification of satisfactory completion of specified work phases. If the Mortgage status at time of notification is 31 or more days delinquent at time of loss, released funds must not exceed 25% increments of insurance loss proceeds. ❑ The contractor, its subcontractors and its material suppliers will provide written acknowledgment of payment for work performed and materials supplied and the necessary lien waivers or releases so that the Mortgaged Premises may remain clear of all such liens and encumbrances ■ Each scheduled work phase has been satisfactorily completed in accordance with the plans and specifications in the contract The Servicer may choose to have the above-described oversight functions performed by its staff or by a third party (such as a specialized firm or another Servicer). However, the Freddie Mac Single-Family Seller/Servicer Guide Chapter 8202 As of 05/06/26 Page 8202-17 Servicer is liable for the performance of any third party it retains. The third party may be compensated from insurance proceeds retained by the Servicer only to the extent agreed to by the Borrower and allowed under applicable law. (e) Final inspection of the Mortgaged Premises The Servicer must follow the requirements below regarding the final inspection. Requirements for final inspection Mortgage current or less than 31 days delinquent at the time of loss Mortgage 31 or more days delinquent at the time of loss A final inspection is not required. A final inspection is always required to ensure all repairs are completed.

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