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B7-4-02, Fidelity/Crime Insurance Requirements for Project Developments (12/14/2022)


This topic contains information on fidelity/crime insurance requirements, including:

Determining if Fidelity/Crime Insurance is Required

Fidelity/crime insurance is required for all condo and co-op projects, with the following exceptions:

  • projects that qualify for a waiver of project review as described in  B4-2.1-02, Waiver of Project Review
  • condo projects reviewed under the Limited Review method as described in  B4-2.2-01, Limited Review Process,
  • condo or co-op projects consisting of 20 units or less, or
  • condo or co-op projects that would need fidelity/crime insurance coverage of $5,000 or less (based on the calculations described in Determining the Required Coverage Amount).

Coverage Requirements

When required, the HOA or co-op corporation must have fidelity/crime insurance coverage for the dishonest or fraudulent acts of anyone who either handles or is responsible for funds held or administered for the HOA or co-op corporation. Fidelity/crime insurance is required whether or not that individual receives compensation for services rendered. Accordingly, the HOA or co-op corporation fidelity/crime insurance policy must include coverage for the acts of any management agent.

A management agent that handles funds for the HOA or co-op corporation should additionally be covered by its own fidelity/crime insurance policy, however, a fidelity/crime insurance policy maintained by the management agent (with the management agent as the named insured) is not an acceptable alternative for a fidelity/crime insurance policy in the HOA or co-op corporation's name that provides coverage for the acts of all parties with access to their funds, including the management agent.

Determining the Required Coverage Amount

When fidelity/crime insurance is required, the lender or servicer must review the project legal documents or other source acceptable to the lender or servicer to verify whether the HOA or co-op corporation and any associated management company adhere to one or more of the financial controls listed below:

  • Separate bank accounts are maintained for the working account and the reserve account, each with appropriate access controls, and the bank in which funds are deposited sends copies of the monthly bank statements directly to the HOA or co-op corporation.
  • The management company maintains separate records and bank accounts for each HOA or co-op corporation that uses its services, and the management company does not have the authority to draw checks on, or transfer funds from, the reserve account of the HOA or co-op corporation.
  • Two members of the Board of Directors must sign any checks written on the reserve account.

The following table describes how to determine the minimum required amount of fidelity/crime insurance.

If the HOA or co-op corporation Then the fidelity/crime insurance coverage amount must equal at least...
adheres to one or more of the financial controls above the sum of three months of assessments on all units in the project.
does not adhere to one or more of the financial controls above the maximum funds that are in the custody of the HOA or co-op corporation, or its management agent, at any time.

Note: In states that have statutory fidelity/crime insurance requirements, Fannie Mae accepts those requirements in place of its own.

Named Insured

The fidelity/crime insurance policy must designate the HOA or co-op corporation as the named insured with premiums paid as a common expense by the HOA or co-op corporation.

Recent Related Announcements

The table below provides references to recently issued Announcements that are related to this topic.

Announcements Issue Date
Announcement SEL-2022-10 December 14, 2022
Announcement SEL-2021-11 December 15, 2021


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