B-3-01, Flood Insurance Requirements Applicable to All Property Types (02/14/2024)

Refer to Selling Guide B7-3-06, Flood Insurance Requirements for All Property Types for general flood insurance requirements. This topic describes additional requirements only applicable to servicers.

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

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 ReimbursementF-1-05, Expense Reimbursement 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 canceled, the servicer must

• cancel the flood insurance, and

• maintain a copy of the letter from FEMA in the individual mortgage loan file.

Refer to Selling Guide B7-3-06, Flood Insurance Requirements for All Property Types for determining the required coverage amount for first lien mortgage loans.

If Fannie Mae does not have an interest in the first lien mortgage loan and the property securing a second lien mortgage loan is not covered by a required flood insurance policy because the holder of the first lien mortgage loan did not require flood insurance coverage, the servicer must require the borrower to obtain a flood insurance policy with coverage in the amount of the lesser of

• the UPB of all property liens, or

• the maximum coverage available under the NFIP.

Refer to Selling Guide B7-3-06, Flood Insurance Requirements for All Property Types for additional requirements that must also be met in the event of a lapse of the NFIP. 

The following table lists the servicer's responsibilities for impacted mortgage loans during a lapse of the NFIP.