source:
  type: guide
  id: fhlmc-2101.7
  authority: Freddie Mac Single-Family Seller/Servicer Guide Section 2101.7 — Fidelity
    insurance coverage
  description: Freddie Mac Single-Family Seller/Servicer Guide Section 2101.7 — Fidelity
    insurance coverage.
  coverage_tier: operative
obligations:
- id: fhlmc-2101.7-full
  canonical_id: fhlmc-2101.7-full
  section: Freddie Mac Single-Family Seller/Servicer Guide Section 2101.7 — Fidelity
    insurance coverage
  type: do
  tags:
  - regulator-direct
  - fhlmc
  - freddie-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Freddie Mac Single-Family Seller/Servicer Guide Section 2101.7 — Fidelity
      insurance coverage
    source_class: fhlmc-guide
    source_url: https://guide.freddiemac.com/ci-guide
    snapshot_id: 5869ee9e606cd4ae
    fetched_at: '2026-05-23T00:27:40Z'
    content_hash: sha256:9a1b23e5024bb369e7a59d36b3702383c11ace68b5d209fdef791bc8f955c637
    paragraph_quote: '2101.7: Fidelity insurance coverage (04/13/16) (a) Documentation
      Fidelity insurance coverage may be documented on a bond form acceptable to Freddie
      Mac or on the standard bond form currently mandated by or acceptable to the
      government agency that has regulatory or supervisory authority over the Seller/Servicer.
      If the Seller/Servicer is not regulated or supervised, Freddie Mac will accept
      coverage documented on the bond form Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 2101 As of 05/06/26 Page 2101-16 commonly issued to institutions
      similar to the Seller/Servicer. The coverage may be provided in policy forms
      with names that include, but are not limited to, Fidelity Bond, Mortgage Bankers
      Bond, Financial Institution Bond, Financial Institution Crime Policy or Bankers
      Blanket Bond. Whichever policy form is relied upon to document the coverage
      required by Freddie Mac, the Seller/Servicer warrants that the terms of such
      coverage meet all of the requirements in Section 2101.7(b). (b) Scope Fidelity
      insurance coverage must protect the Seller/Servicer against loss resulting from
      dishonesty, theft and/or fraud committed by officers and/or employees of the
      Seller/Servicer as well as by persons duly authorized to act on the Seller/Servicer’s
      behalf in the origination and/or sale of Mortgages and/or Servicing of Mortgages
      or REO, including, but not limited to, the following: ■ Employees of outside
      firms while providing legal services to the Seller/Servicer or performing as
      data processors of checks or other accounting records for the Seller/Servicer
      — unless such firms have provided to the Seller/Servicer satisfactory evidence
      of fidelity insurance at least equal to that required of the Seller/Servicer
      by Freddie Mac ■ Persons assigned to the Seller/Servicer through an intervening
      employer or agency to perform the usual duties of an employee of the Seller/Servicer
      on a contingent or temporary basis, and ■ Interns For this section, REO includes
      the following: ■ REO held for investment ■ REO acquired in the settlement of
      Mortgages (e.g., foreclosed Mortgages) Fidelity insurance must also: ■ Protect
      Freddie Mac, as an investor, against losses that Freddie Mac incurs in connection
      with dishonesty, theft and/or fraud committed by any partner, sole proprietor
      or major shareholder of the Seller/Servicer ■ Not be limited solely to dishonesty,
      theft and/or fraud committed for improper personal gain ■ Provide that the insurer
      will name Freddie Mac, as an investor, as sole loss payee on payment drafts
      the insurer issues for losses that Freddie Mac incurs in connection with acts
      covered by the insurance, and Freddie Mac Single-Family Seller/Servicer Guide
      Chapter 2101 As of 05/06/26 Page 2101-17 ■ Give Freddie Mac, as an investor,
      the right to file a claim directly with the insurer for losses that Freddie
      Mac incurs in connection with acts covered by insurance, irrespective of whether
      the Seller/Servicer tenders a claim under the bond in connection with the events
      that give rise to the claim filed by Freddie Mac 2101.7: Fidelity insurance
      coverage (Future effective date 06/08/26) (a) Documentation Fidelity insurance
      coverage may be documented on a bond form acceptable to Freddie Mac or on the
      standard bond form currently mandated by or acceptable to the government agency
      that has regulatory or supervisory authority over the Seller/Servicer. If the
      Seller/Servicer is not regulated or supervised, Freddie Mac will accept coverage
      documented on the bond form commonly issued to institutions similar to the Seller/Servicer.
      The coverage may be provided in policy forms with names that include, but are
      not limited to, Fidelity Bond, Mortgage Bankers Bond, Financial Institution
      Bond, Financial Institution Crime Policy or Bankers Blanket Bond. Whichever
      policy form is relied upon to document the coverage required by Freddie Mac,
      the Seller/Servicer warrants that the terms of such coverage meet all of the
      requirements in this section. (b) Scope Fidelity insurance coverage must protect
      the Seller/Servicer against loss resulting from dishonesty, theft and/or fraud
      committed by any of the following persons (referred to as “Designated Agents”),
      whether acting alone or in collusion with others: ■ Any officer or employee
      of the Seller/Servicer ■ Any employee of an outside firm while they are providing
      legal, data processing or other accounting services for the Seller/Servicer
      ■ Any person assigned to the Seller/Servicer through an intervening employer
      or agency to perform the usual duties of an employee of the Seller/Servicer
      on a contingent or temporary basis, and ■ Any intern of the Seller/Servicer
      Fidelity insurance must also include the following provisions for the benefit
      of Freddie Mac, as holder of an insurable interest in the Mortgages and/or REO
      originated, sold and/or serviced by the Seller/Servicer: ■ Freddie Mac is protected
      against any loss it incurs in connection with dishonesty, theft and/or fraud
      committed by any partner, sole proprietor or major shareholder of the Freddie
      Mac Single-Family Seller/Servicer Guide Chapter 2101 As of 05/06/26 Page 2101-18
      Seller/Servicer, whether acting alone or in collusion with others and without
      any limitation as to improper personal gain ■ Freddie Mac is named as a sole
      loss payee on payment drafts the insurer issues for losses that Freddie Mac
      incurs in connection with acts covered by the insurance ■ Freddie Mac has the
      right to file a claim directly with the insurer if the Seller/Servicer fails
      to file a claim for a covered loss incurred by Freddie Mac when reasonably available
      ■ Bankruptcy or insolvency of the insured or of the insured’s estate will not
      relieve the insurer of any of its obligations under the bond (c) Limits and
      deductibles/retentions required The minimum acceptable limits per fidelity loss
      or occurrence are listed in the following table. The maximum amount of fidelity
      bond coverage required is $150 million. Base* Minimum required insurance limit
      Maximum deductible clause based on face value of policy $100 million or less
      $300,000 Higher of 10% or $100,000 Over $100 million up to $1 billion + 0.150%
      of the next $400 million + 0.125% of the next $500 million Over $1 billion +
      0.100% of any amount over $1 billion 15% Note: The deductible cannot exceed
      1% of the Seller/Servicer’s total net worth. *Base = The highest of total annual
      Home Mortgage and Multifamily Mortgage origination, sale or Servicing volume,
      including Home Mortgages and Multifamily Mortgages held in portfolio. The Seller/Servicer
      must include in its Base the UPB of all Mortgages for which it holds the related
      Servicing Contract Right, regardless of whether a Servicing Agent has been engaged
      to perform subservicing on behalf of the Seller/Servicer. A Servicing Agent
      must only include in its Base the UPB of Mortgages for which it holds the related
      Servicing Contract Right and need not include the UPB of Mortgages for which
      the Servicing Agent has been engaged to perform subservicing on behalf of another
      Seller/Servicer. Freddie Mac Single-Family Seller/Servicer Guide Chapter 2101
      As of 05/06/26 Page 2101-19 2101.8: Mortgagee’s errors and omissions (E&O) insurance
      coverage (06/10/20) (a) Documentation Mortgagee’s errors and omissions (E&O)
      insurance coverage must be documented on policy forms commonly issued to institutions
      similar to the Seller/Servicer. The coverage may be provided in policy forms
      with names that include, but are not limited to, Mortgage Bankers Bond, Mortgage
      Errors & Omissions, Mortgage Impairment, Mortgage Holders Liability, Professional
      Liability or Mortgage Protection. Whichever policy form is relied upon to document
      the coverage required by Freddie Mac, the Seller/Servicer warrants that the
      terms of such coverage meet all of the requirements in Section 2101.8(b) below.
      (b) Scope The coverage must protect the Seller/Servicer against loss resulting
      from negligence, errors or omissions committed by the persons required to be
      covered by the Seller/Servicer’s fidelity insurance, under Section 2101.7(b),
      while performing their duties with respect to Mortgages originated and/or sold
      by the Seller and/or Mortgages or REO serviced by the Servicer. Such duties
      include, but are not limited to, the following: ■ Determining whether the Mortgaged
      Premises are located in Special Flood Hazard Areas (SFHA) as defined by the
      Director of the Federal Emergency Management Agency (FEMA) ■ Ensuring that the
      Mortgaged Premises are insured in accordance with Chapter 4703 ■ Maintaining,
      where applicable, FHA insurance, VA guaranty, RHS guaranty or mortgage insurance
      on the Mortgages ■ Complying with applicable reporting requirements of the FHA,
      VA, RHS or MI, and ■ Ensuring the payment of property taxes and any other mandatory
      assessments on the Mortgaged Premises or REO For this section, REO includes
      the following: ■ REO held for investment ■ REO acquired in the settlement of
      Mortgages (e.g., foreclosed Mortgages) Mortgagee’s E&O insurance coverage must
      also: Freddie Mac Single-Family Seller/Servicer Guide Chapter 2101 As of 05/06/26
      Page 2101-20 ■ Provide that the insurer will name Freddie Mac, as an investor,
      as sole loss payee on payment drafts the insurer issues for losses that Freddie
      Mac incurs in connection with acts covered by the insurance, and ■ Give Freddie
      Mac, as an investor, the right to file a claim directly with the insurer for
      losses that Freddie Mac incurs in connection with acts covered by the insurance,
      irrespective of whether the Seller/Servicer tenders a claim under the policy
      in connection with the events that give rise to the claim filed by Freddie Mac
      2101.8: Mortgagee’s errors and omissions (E&O) insurance coverage (Future effective
      date 06/08/26) (a) Documentation Mortgagee’s errors and omissions (E&O) insurance
      coverage must be documented on policy forms commonly issued to institutions
      similar to the Seller/Servicer. The coverage may be provided in policy forms
      with names that include, but are not limited to, Mortgage Bankers Bond, Mortgage
      Errors & Omissions, Mortgage Impairment, Mortgagee Interest, Mortgage Holders
      Liability, Professional Liability or Mortgage Protection. Whichever policy form
      is relied upon to document the coverage required by Freddie Mac, the Seller/Servicer
      warrants that the terms of such coverage meet all of the requirements in this
      section. (b) Scope The coverage must protect the Seller/Servicer against loss
      resulting from negligence, errors or omissions committed by the Seller/Servicer
      or any Designated Agent (as defined in Section 2101.7(b)) while performing,
      at a minimum, the following duties with respect to Mortgages originated and/or
      sold by the Seller and/or Mortgages or REO serviced by the Servicer: ■ Determining
      whether the Mortgaged Premises are located in Special Flood Hazard Areas ■ Ensuring
      that the Mortgaged Premises are insured in accordance with Chapter 4703 ■ Maintaining,
      where applicable, FHA insurance, VA guaranty, RHS guaranty or mortgage insurance
      on the Mortgages ■ Complying with applicable reporting requirements of the FHA,
      VA, RHS or MI, and ■ Ensuring the payment of property taxes and any other mandatory
      assessments on the Mortgaged Premises or REO Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 2101 As of 05/06/26 Page 2101-21 E&O insurance coverage must also
      include the following provisions for the benefit of Freddie Mac, as holder of
      an insurable interest in the Mortgages and/or REO originated, sold and/or serviced
      by the Seller/Servicer: ■ Freddie Mac is named as a loss payee on payment drafts
      the insurer issues for losses that Freddie Mac incurs in connection with acts
      covered by the insurance ■ Freddie Mac has the right to file a claim directly
      with the insurer if the Seller/Servicer fails to file a claim for a covered
      loss incurred by Freddie Mac when reasonably available ■ Bankruptcy or insolvency
      of the insured or of the insured’s estate will not relieve the insurer of any
      of its obligations under the policy (c) Limits and deductibles E&O coverage
      must equal the amount of the Seller/Servicer’s fidelity bond coverage. However,
      Freddie Mac does not require E&O coverage in excess of: ■ $10 million if the
      Base (as defined in Section 2101.8(c)) consists only of Home Mortgages ■ $30
      million if the Base consists of Home Mortgages and Multifamily Mortgages Freddie
      Mac will accept E&O policies providing coverage per Mortgage if the insurance
      limit per Mortgage is no less than the UPB of the largest Mortgage originated
      and/or sold by the Seller/Servicer, whichever is highest, provided that Seller/Servicer
      must review the balances of the Mortgages before each premium renewal date to
      determine whether the above limitation needs to be increased as the result of
      the origination of higher balance Mortgages 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: Base* Maximum
      deductible Less than $1 billion The 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 * Base = The highest of total annual Home Mortgage and Multifamily
      Mortgage origination, sale or Servicing volume, including Home Mortgages and
      Multifamily Mortgages held in portfolio. The Seller/Servicer must include in
      its Base the UPB of all Mortgages for which it holds the related Servicing Contract
      Right, regardless of whether a Servicing Agent has been engaged to perform subservicing
      on Freddie Mac Single-Family Seller/Servicer Guide Chapter 2101 As of 05/06/26
      Page 2101-22 behalf of the Seller/Servicer. A Servicing Agent must only include
      in its Base the UPB of Mortgages for which it holds the related Servicing Contract
      Right and need not include the UPB of Mortgages for which the Servicing Agent
      has been engaged to perform subservicing on behalf of another Seller/Servicer.
      2101.9: Seller/Servicer insurance reporting requirements (12/07/20) (a) Certificate
      of insurance Within 30 days of obtaining or renewing fidelity and/or mortgagee’s
      errors and omissions (E&O) insurance, the Seller/Servicer must submit to Freddie
      Mac (see Directory 1) a certificate of insurance and related documentation showing
      the following information: ■ Name and address of insurer and insurance broker
      ■ Bond or policy number ■ The Seller/Servicer as named insured or joint named
      insured ■ Type of insurance and coverage; limit of liability on a per loss,
      occurrence or mortgage basis (specify) and/or any applicable aggregate limit
      of coverage; and effective dates of coverage ■ Deductible amounts ■ Any endorsement
      or optional coverage modifying the original bond or policy if the endorsement
      or optional coverage reinforces compliance with Freddie Mac’s requirements or
      effectively reduces the coverage required by Freddie Mac. Reference to a form
      number is not acceptable. A copy of the endorsement or optional coverage is
      required if the endorsement or optional coverage cannot be summarized substantively
      on the certificate. ■ The insurer’s agreement to notify Freddie Mac (see Directory
      1) at least 30 calendar days before the insurer, on its own initiative, cancels
      or non-renews the Seller/Servicer’s coverage for any reason ■ The insurer’s
      agreement to notify Freddie Mac (see Directory 1) within 10 Business Days after
      the insurer, on its own initiative, reduces or restrictively modifies the Seller/Servicer’s
      coverage for any reason or, at the Seller/Servicer’s request, cancels or non-renews
      the Seller/Servicer’s coverage ■ The insurer’s agreement to notify Freddie Mac
      (see Directory 1) within 10 Business Days after the insurer’s payment to the
      Seller/Servicer of a claim that (i) applies to a coverage written with an aggregate
      limit of insurance and (ii) depletes such aggregate limit of insurance by more
      than 50% Freddie Mac Single-Family Seller/Servicer Guide Chapter 2101 As of
      05/06/26 Page 2101-23 (b) Annual certification The Seller/Servicer must certify
      compliance with Freddie Mac’s requirements for fidelity and mortgagee’s E&O
      insurance on its Annual Certification Report, submitted in accordance with Sections
      2101.10 and 2101.11. (c) Notice of loss or change in coverage The Seller/Servicer
      must report to Freddie Mac the following events within 10 Business Days of their
      occurrence using the Change and Activity Report, submitted in accordance with
      Section 2101.12: ■ The determination that any single act of embezzlement, theft
      of funds or fraud or mortgagee’s E&O loss has caused loss exceeding $100,000,
      whether or not Freddie Mac’s interests are affected or a claim is filed with
      the insurer, or ■ The receipt of a notice from the insurer that the insurer
      has taken or intends to take action to cancel, reduce, not renew or restrictively
      modify the Seller/Servicer’s fidelity and/or mortgagee’s E&O insurance for any
      reason. The Seller/Servicer must include a copy of the insurer’s notice and
      detail the reasons for the insurer’s action or intended action if not stated
      in the insurer’s notice. The Seller/Servicer must also report its effort to
      obtain replacement coverage or otherwise satisfy Freddie Mac’s insurance requirements.
      2101.9: Seller/Servicer insurance reporting requirements (Future effective date
      06/08/26) (a) Reporting of insurance documentation Within 30 days of obtaining
      or renewing any required bond or policy, the Seller/Servicer must submit to
      Freddie Mac (see Directory 1) a certificate of insurance and related documentation
      showing the following information: ■ Name and address of insurer and insurance
      broker ■ Bond or policy number ■ The Seller/Servicer as named insured or joint
      named insured ■ Type of insurance and coverage; limit of liability on a per
      loss, occurrence or mortgage, or claims-made basis (specify) and/or any applicable
      aggregate limit of coverage; and effective dates of coverage ■ Deductible or
      retention amounts Freddie Mac Single-Family Seller/Servicer Guide Chapter 2101
      As of 05/06/26 Page 2101-24 ■ Any endorsement or optional coverage modifying
      the original bond or policy if the endorsement or optional coverage reinforces
      compliance with Freddie Mac’s requirements or effectively reduces the coverage
      required by Freddie Mac. Reference to a form number is not acceptable. A copy
      of the endorsement or optional coverage is required if the endorsement or optional
      coverage cannot be summarized substantively on the certificate. ■ The insurer’s
      agreement to notify Freddie Mac (see Directory 1): ❑ At least 30 calendar days
      before the insurer, on its own initiative, cancels or non- renews the Seller/Servicer’s
      coverage for any reason ❑ Within 10 Business Days after the insurer, on its
      own initiative, reduces or restrictively modifies the Seller/Servicer’s coverage
      for any reason or, at the Seller/Servicer’s request, cancels or non-renews the
      Seller/Servicer’s coverage (b) Reporting of loss or change in coverage The Seller/Servicer
      must report to Freddie Mac the following events within 10 Business Days of their
      occurrence using the Change and Activity Report, submitted in accordance with
      Section 2101.12: ■ The determination that any single act covered under the required
      bonds and policies has caused loss exceeding $100,000, whether or not Freddie
      Mac’s interests are affected or a claim is filed with the insurer, or ■ The
      receipt of notice from any insurer that such insurer has taken or intends to
      take action to cancel, reduce, not renew or restrictively modify any required
      Seller/Servicer insurance coverage for any reason. The Seller/Servicer must
      include a copy of the insurer’s notice and detail the reasons for the insurer’s
      action or intended action if not stated in the insurer’s notice. The Seller/Servicer
      must also report its effort to obtain replacement coverage or otherwise satisfy
      Freddie Mac’s insurance requirements.'
  judgment: false
