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B7-3-08, Mortgagee Clause for Property and Flood Insurance (12/15/2021)

Introduction

This topic contains information on the mortgagee clause for property and flood insurance.


Mortgagee Clause

Fannie Mae must not be named in the mortgagee clause, unless the coverage or its interest would be impaired by Fannie Mae not being named. If Fannie Mae is named, the clause must read: “Fannie Mae, in care of (insert servicer’s name and address here).” This ensures that all matters related to the policy are referred directly to the servicer and not to Fannie Mae.

When Fannie Mae is not named in the mortgagee clause, the lender’s name, followed by the phrase “its successors and assigns,” must be shown as the mortgagee. If the lender is not the servicer, the servicer’s name and address must be specified. In all cases, the insurer must be instructed to send all correspondence, policies, and bills to the servicer (or to both the first-lien and second-lien mortgage servicers).

If the mortgage is registered with MERS and is originated naming MERS as the original mortgagee of record, MERS must not be named as mortgagee or loss payee on any property insurance policy. The mortgagee clause must name the servicer (unless Fannie Mae must be named because the coverage or its interest would be impaired as mentioned above).

The table below provides additional requirements for mortgagee clauses.

Type of Mortgage Mortgagee Clause Requirements
First-lien mortgage on an individual single-family property The policy must include (or have attached) a “standard” or “union” mortgagee clause (without contribution) in the form customarily used in the area in which the property is located. A mortgagee clause that amounts to a mere loss payable clause is not acceptable.
Any loan secured by a unit in a condo or co-op project If a unit owner or shareholder maintains an individual policy (as indicated by the project’s legal documents) or if an HO-6 policy is maintained for interior coverage, it must include the standard mortgagee clause as defined above.

A mortgagee clause naming Fannie Mae or the lender is not required for a master project property insurance policy, an NFIP Residential Condominium Building Association Policy or equivalent flood policies issued by a private insurer.


Related Announcements

The table below provides references to the Announcements that have been issued that are related to this topic.

Announcements Issue Date
Announcement SEL-2021-11 December 15, 2021
Announcement SEL-2018-09 December 04, 2018
Announcement SEL-2016–05 June 28, 2016
Announcement SEL-2014–10 July 29, 2014
Announcement SEL-2011–04 May 24, 2011
Announcement SEL-2010–02 March 2, 2010

 

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