source:
  type: guide
  id: fnma-sel-b7-1-01
  authority: Fannie Mae Selling Guide B7-1-01 — Provision of Mortgage Insurance
  description: Fannie Mae Selling Guide B7-1-01 — Provision of Mortgage Insurance.
  coverage_tier: operative
obligations:
- id: fnma-sel-b7-1-01-full
  canonical_id: fnma-sel-b7-1-01-full
  section: Fannie Mae Selling Guide B7-1-01 — Provision of Mortgage Insurance
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B7-1-01 — Provision of Mortgage Insurance
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/selling-guide
    snapshot_id: 5f7b8b79da595d76
    fetched_at: '2026-05-25T14:09:57Z'
    content_hash: sha256:98cf85a02861bbe84914a0e339b327c8fc131869a8a573882007bbeea60c5701
    paragraph_quote: 'B7-1-01, Provision of Mortgage Insurance (04/02/2025) Introduction
      This topic contains information on mortgage insurance, including: General Requirements
      Use of Approved Forms LTV Ratio Determination in New York State Payment of Mortgage
      Insurance Premiums Mortgage Insurability Prohibition of Certain Mortgage Insurance
      Agreements General Requirements Lenders must ensure that any mortgage insurance
      Fannie Mae requires for a mortgage loan is in place. Lenders must obtain and
      be able to produce evidence of any required mortgage insurance or loan guaranty.
      Unless the lender has provided another charter-compliant form of credit enhancement,
      the lender must obtain a primary mortgage insurance policy for a conventional
      ﬁrst mortgage loan that has an LTV ratio greater than 80% at the time it is
      purchased for Fannie Mae’s portfolio or securitized. (For this purpose, the
      LTV ratio is calculated based upon the unpaid principal balance of the mortgage
      loan at the time it is purchased or securitized by Fannie Mae.) Published May
      6, 2026 830 For a purchase money loan, the value used in determining the LTV
      ratio is the lower of the sales price or the appraised value of the security
      property. For a reﬁnance loan, the value used in originating the loan can be
      derived from an appraisal, AVM, or other acceptable method. Conventional mortgages
      may be insured by private mortgage insurers or state or local insuring agencies
      that have been approved under Fannie Mae’s Qualiﬁed Mortgage Insurer Approval
      Requirements to insure loans sold to or serviced for Fannie Mae. For a listing
      of the eligible conventional mortgage insurers and their associated mortgage
      insurance codes, see Approved Mortgage Insurers and Related Identiﬁers. The
      website is the deﬁnitive source for approved mortgage insurers. The form of
      mortgage insurance policy, including any endorsements, must be acceptable to
      Fannie Mae. Use of Approved Forms Lenders are responsible for ensuring that
      only Fannie Mae-approved mortgage insurance forms and related endorsements and
      other forms (Forms) are used in connection with individual loans sold to or
      securitized by Fannie Mae. These Forms provide the terms of mortgage insurance
      coverage on individual loans. A list of Fannie Mae-approved Forms for each insurance
      provider is available on Fannie Mae’s website – see Approved Mortgage Insurance
      Forms. Any mortgage loan sold to or securitized by Fannie Mae that requires
      primary mortgage insurance (or is delivered with primary mortgage insurance
      even though not required) and has a loan application date on or after October
      1, 2014, must be insured under one of the Fannie Mae-approved Forms. If such
      loan is insured under any pre-existing forms or agreements between lenders and
      mortgage insurers, the loan is not eligible for sale to Fannie Mae, and is subject
      to repurchase if identiﬁed after acquisition by Fannie Mae. Any mortgage loan
      sold to or securitized by Fannie Mae that requires primary mortgage insurance
      (or is delivered with primary mortgage insurance even though not required) and
      has a loan application date prior to October 1, 2014, may be insured under either
      one of the Fannie Mae-approved Forms; or any pre-existing forms and agreements
      between lenders and mortgage insurers, as long as the lender ﬁrst conﬁrms with
      the mortgage insurer that such forms and agreements were approved by Fannie
      Mae for use at the time of the loan application date. LTV Ratio Determination
      in New York State Under a New York statute, a mortgage insurer must issue mortgage
      insurance based on a determination of the “fair market value” of the property.
      The term “fair market value” is not deﬁned in the statute, but has been deﬁned
      by the New York insurance regulator as being the “appraised value.” Per the
      statute, for co-op properties, the issuance of mortgage insurance must be based
      on the “purchase price of the ownership interest and the proprietary lease.”
      As a result, the determination of value for properties in New York is diﬀerent
      from Fannie Mae’s standard deﬁnition of value that is used to calculate the
      LTV ratio. The following table identiﬁes the value calculation that is to be
      used for mortgage loans secured by properties in New York for policies that
      are based on the LTV ratio. Published May 6, 2026 831 LTV Ratio Calculation
      Policy LTV ratio based on the appraised value for non- co-op properties • Lenders
      must base their determination of when mortgage insurance is required solely
      on the appraised value of the property. If the appraised value of the property
      exceeds the sales price, this determination may result in mortgage insurance
      not being placed on a mortgage loan as would otherwise be required using Fannie
      Mae’s standard deﬁnition. • If this calculation results in mortgage insurance
      not being placed on the loan where mortgage insurance would otherwise have been
      required using Fannie Mae’s standard deﬁnition, the lender must deliver the
      loan to Fannie Mae using the MI Absence Reason Type of “No MI Based On Original
      LTV” (Sort ID 429). Published May 6, 2026 832 LTV Ratio Calculation Policy LTV
      ratio based on the sales price for co-op properties • For purchase transactions,
      except as provided below, lenders must base their determination of when mortgage
      insurance is required solely on the sales price for the co-op property. If the
      sales price of the property is more than the appraised value, this determination
      may result in mortgage insurance not being placed on a mortgage loan as would
      otherwise be required using Fannie Mae’s standard deﬁnition. • Exception: if
      mortgage insurance would be required based on sales price of the property but
      ⚬ the sales price is less than the appraised value at the time the loan is made,
      and ⚬ the LTV ratio based on that appraised value is 75% or less (or the current
      percentage speciﬁed under Section 6503(d) of the New York Insurance law for
      continuing mortgage insurance) then mortgage insurance must not be placed on
      the loan. Note: For purchase transactions when the co-op property is subject
      to resale restrictions that terminate automatically upon foreclosure and the
      appraised value exceeds the sales price, lenders may use the appraised value
      of the property without resale restrictions, rather than the sales price when
      determining when mortgage insurance is required. For additional information
      on calculating LTV ratios on loans with resale restrictions, see B5-5.2-02,
      Loans with Resale Restrictions: Eligibility, Collateral and Delivery Requirements
      and B5-5.3-03, Shared Equity Transactions: Eligibility, Underwriting and Collateral
      Requirements. • If this calculation results in mortgage insurance not being
      placed on the loan where mortgage insurance would otherwise have been required
      using Fannie Mae’s standard deﬁnition, the lender must deliver the loan to Fannie
      Mae using the MI Absence Reason Type of “No MI Based On Original LTV” (Sort
      ID 429). Published May 6, 2026 833 LTV Ratio Calculation Policy LTV ratio based
      on the appraised value for reﬁnances of co-op share loans • Lenders must base
      their determination of when mortgage insurance is required for a reﬁnance transaction
      for co-op share loans solely on the appraised value. LTV ratio based on the
      lower of the sales price or appraised value (standard LTV ratio calculation)
      for all property types • Irrespective of the use of appraised value or sales
      price for determining whether mortgage insurance is required, this standard
      LTV ratio calculation must be used to determine the level of mortgage insurance
      coverage that is required on the mortgage loan. See B1-1-01, Contents of the
      Application Package, and B7-1-02, Mortgage Insurance Coverage Requirements,
      for additional information. • The standard LTV ratio calculation must also be
      used ⚬ to determine whether the loan satisﬁes any of Fannie Mae’s other eligibility
      criteria that are based on the LTV ratio of the loan; ⚬ to determine any loan-level
      price adjustments derived from Fannie Mae’s pricing matrix that includes LTV
      ratios or CLTV ratios as a risk attribute in its lookup table; and ⚬ when the
      loan is delivered to Fannie Mae (Sort ID 254). (The standard LTV ratio must
      be delivered even if the appraised value or sales price is used to determine
      that mortgage insurance coverage is not required.) Payment of Mortgage Insurance
      Premiums Premium plans for mortgage insurance may be: monthly plans – monthly
      premiums from accumulated escrow deposits (with no initial payment at closing),
      annual plans – an initial payment at closing to cover the ﬁrst year''s premium
      and annual renewal premiums thereafter paid from accumulated escrow deposits,
      single-premium plans – lump-sum premium at closing to purchase life-of-the-mortgage
      coverage, or split-premium plans – an initial payment at closing and an ongoing
      monthly premium from accumulated escrow deposits. Published May 6, 2026 834
      Mortgage Insurability Each loan a lender delivers to Fannie Mae must be insurable.
      A mortgage is insurable if a mortgage insurer would not decline to insure it
      by reason of any fraud, misrepresentation, negligence, or dishonest, criminal,
      or knowingly wrongful act in origination or servicing, and would not be entitled
      to deny a claim by reason of any of the foregoing. Prohibition of Certain Mortgage
      Insurance Agreements Fannie Mae prohibits lenders from entering into any agreement
      that modiﬁes the terms of an approved mortgage insurance master policy on loans
      delivered to or intended for delivery to Fannie Mae. Prohibited agreements include,
      but are not limited to, agreements that directly or indirectly: modify master
      policy provisions for settling of claims, limit the right of a mortgage insurer
      to conduct ﬁle reviews or investigate claims, limit the right of a mortgage
      insurer to rescind coverage, rescind or modify coverage, or restrict notice
      to Fannie Mae of changes in coverage status. Further, Fannie Mae prohibits loss
      sharing, indemniﬁcation, settlement, or similar agreements of any kind between
      lenders and mortgage insurance companies that aﬀect Fannie Mae''s interest in
      its mortgage loans or modify the terms of an approved mortgage insurance master
      policy on loans delivered to or intended for delivery to Fannie Mae. Traditional
      captive reinsurance arrangements between a mortgage insurance company and a
      licensed insurer or reinsurer may be permissible so long as they do not: aﬀect
      Fannie Mae''s interest in its mortgage loans, or modify the terms of an approved
      mortgage insurance master policy on loans delivered to or intended for delivery
      to Fannie Mae. Recent Related Announcements The table below provides references
      to recently issued Announcements that are related to this topic. Announcements
      Issue Date Announcement SEL-2025-02 April 02, 2025 Announcement SEL-2021-01
      February 03, 2021 Announcement SEL-2020-05 September 02, 2020 Announcement SEL-2019-07
      August 07, 2019 Published May 6, 2026 835'
  judgment: false
