Selling Guide

The Selling Guide is organized into parts that reflect how lenders generally categorize various aspects of their business relationship with Fannie Mae. To begin browsing, select from any of the sections below. You may also download the entire Selling Guide in PDF format.

View All Selling Policy Updates

Download PDF

Hint: Ask in a form of a question.

A3-5-03, Errors and Omissions Policy Requirements (07/25/2017)

Introduction

This topic contains information on errors and omissions policy requirements, including:

 

Errors and Omissions Coverage Requirements

The errors and omissions policy must, at least, protect the seller/servicer against negligence, errors, and omissions in:

  • maintaining property and flood insurance that meets Fannie Mae’s requirements,

  • maintaining any required mortgage insurance or loan guaranty,

  • determining whether properties are located in Special Flood Hazard Areas,

  • paying real estate taxes and any special assessments, and

  • complying with reporting requirements of the mortgage insurer or guarantor.

 

Errors and Omissions Coverage and Deductible Amounts

The errors and omissions coverage must equal the amount of the seller/servicer’s fidelity bond coverage. See the formula in A3-5-02, Fidelity Bond Policy Requirements to determine the amount of coverage required. However, Fannie Mae does not require errors and omissions coverage in excess of:

  • $10 million if the seller/servicer sells or services only single-family mortgage loans, or

  • $30 million if the seller/servicer sells or services single-family and multifamily mortgage loans.

 

Note: If the seller/servicer uses a subservicing arrangement, the master servicer must maintain errors and omissions coverage at all times for the servicing of mortgage loans that it owns but that the subservicer services for that master servicer. A subservicer must only maintain coverage for mortgage loans that it owns. (See the Servicing Guide A2-1-06, Subservicing for additional information about subservicing arrangements.)

 

Fannie Mae accepts policies that provide for either coverage per aggregate loss or coverage per mortgage loan. If the policy provides coverage per mortgage loan:

  • the insurer’s liability must at least equal the amount of the highest UPB for a single-family or multifamily mortgage loan. that the seller/servicer owns, and

  • the seller/servicer must review the balances of the mortgage loans it services before each premium renewal date to determine whether the above limitation needs to be increased as the result of the origination of higher balance mortgage loans during the last coverage period.

For policies that provide coverage per mortgage loan, the maximum deductible amount for each mortgage loan cannot be more than 5% of the insurer’s liability per mortgage loan.

For policies that provide coverage per aggregate loss, the deductible is determined in accordance with the following table:

Total UPB Maximum Deductible
Less than $1 billion greater of $100,000 or 10% of the face amount of the policy
Equal to or greater than $1 billion 15% of the face amount of the policy

 

Mortgage Impairment or Substitute for Errors and Omissions

Fannie Mae will accept a mortgage impairment or mortgagee interest policy as a substitute for an errors and omissions policy, provided Fannie Mae receives substantially the same coverage that an errors and omissions policy would provide.

Related Articles

A3-5-01, Fidelity Bond and Errors and Omissions Coverage Provisions (07/25/2017)

IntroductionThis topic contains information on fidelity bond and errors and omissions insurance coverage provisions. Fidelity Bond and Errors and...

Read more

A3-5-02, Fidelity Bond Policy Requirements (07/25/2017)

IntroductionThis topic contains information on fidelity bond policy requirements, including: Fidelity Bond Coverage Requirements  Fidelity Bond...

Read more

Have guide questions? Get answers to all of your policy questions, straight from the source.

Get Started
X
Having Issues with Seeing this Page Correctly?

Use Firefox or Chrome   How to do a hard refresh in Internet Explorer
We recommend that you use the latest version of FireFox or Chrome.

Download Firefox
Download Chrome
  A hard refresh will clear the browsers cache for a specific page and force the most recent version of a page.
    Hold the Ctrl key and press the F5 key.
     

Email Us
If you still have Technical Support questions, feel free to emailAsk_Poli@fanniemae.com.