source:
  type: guide
  id: fhlmc-8202.2
  authority: Freddie Mac Single-Family Seller/Servicer Guide Section 8202.2 — Flood
    insurance requirements
  description: Freddie Mac Single-Family Seller/Servicer Guide Section 8202.2 — Flood
    insurance requirements.
  coverage_tier: operative
obligations:
- id: fhlmc-8202.2-full
  canonical_id: fhlmc-8202.2-full
  section: Freddie Mac Single-Family Seller/Servicer Guide Section 8202.2 — Flood
    insurance requirements
  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 8202.2 — Flood
      insurance requirements
    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: '8202.2: Flood insurance requirements (07/09/25) For each Freddie
      Mac-owned Mortgage it services, the Servicer must have policies and controls
      in place to ensure that the Mortgaged Premises, when required, has and maintains
      flood insurance coverage that meets the minimum requirements outlined in Section
      4703.3. The Servicer must have policies, procedures and controls in place to
      ensure the property is adequately protected by flood insurance when required,
      with no lapses in coverage, and the flood insurance premiums are paid. If at
      any time during the term of the Mortgage the Mortgaged Premises is not covered
      by flood insurance in the amount and with the deductible required, the Servicer
      must follow the Lender-Placed Insurance (LPI) process under Section 8202.6.
      The Servicer must have policies, procedures and controls in place to identify
      any map change that becomes effective on or after April 1, 1995 and determine
      which insurable improvements on Mortgaged Premises in the community affected
      by the map change become located in a Special Flood Hazard Area (SFHA) and are
      required to have flood insurance. Flood insurance required under these provisions
      must be obtained within 120 days of the effective date of the map change. If
      the area where the Mortgaged Premises is located is an SFHA but the community
      has become a nonparticipating community and flood insurance provided by the
      National Flood Insurance Program will not be renewed for that community, the
      Servicer must require the Borrower to obtain private flood insurance. If the
      additional coverage cannot be obtained, the Servicer must immediately make appropriate
      recommendations to Freddie Mac (see Directory 5). 8202.3: Liability and fidelity
      or employee dishonesty insurance for Condominium Projects and Cooperative Projects
      (07/09/25) This section contains requirements related to: ■ Liability insurance
      for Condominium Projects and Cooperative Projects ■ Fidelity or employee dishonesty
      insurance for Condominium Projects and Cooperative Projects (a) Liability insurance
      for Condominium Projects and Cooperative Projects Servicers must have policies
      and controls in place to ensure that the liability insurance coverage for Condominium
      Projects and Cooperative Projects meets the minimum requirements outlined in
      Section 4703.5. Freddie Mac Single-Family Seller/Servicer Guide Chapter 8202
      As of 05/06/26 Page 8202-6 (b) Fidelity or employee dishonesty insurance for
      Condominium Projects and Cooperative Projects Servicers must have policies and
      controls in place to ensure that the fidelity or employee dishonesty insurance
      coverage for Condominium Projects and Cooperative Projects meets the minimum
      requirements outlined in Section 4703.5. 8202.4: Evidence of insurance coverage
      requirements (07/09/25) This section contains information related to: ■ Required
      evidence of insurance coverage ■ Insurance policies for Condominiums Projects
      and Cooperative Projects, including master or blanket coverage (a) Required
      evidence of insurance coverage For each property securing a Mortgage owned by
      Freddie Mac, the Servicer must maintain evidence of all required insurance coverages
      in one of the following forms: ■ An original policy (including the Planned Unit
      Development (PUD) or condominium homeowners association, Cooperative Corporation
      or fee simple landowner/lessor’s policy under which the required coverages may
      be provided in whole or in part) and applicable endorsements ■ A copy of the
      original policy and applicable endorsements if the copy meets the requirements
      of Chapter 3302 ■ A certificate, evidence or declarations of insurance showing
      at least the following information: ❑ Name insured and mortgagee (where applicable,
      PUD or condominium homeowners association, Cooperative Corporation, fee simple
      landowner/lessor and PUD, or Condominium Unit, Cooperative Unit or ground lease
      community mortgagee for all units in which the mortgagee has an insurable interest)
      ❑ Property address ❑ Type, amount and effective dates of coverage ❑ Deductible
      amount and coverage to which each such deductible applies Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 8202 As of 05/06/26 Page 8202-7 ❑ Any endorsement
      or optional coverage obtained and made part of the original policy ❑ Insurer’s
      agreement to provide at least 10 days’ notice to the mortgagee (including any
      applicable PUD or Condominium Unit or ground lease community leasehold mortgagee)
      before any reduction in coverage or cancelation of the policy; or for Cooperative
      Projects, 30 days’ notice to the mortgagee before cancelation ❑ Signature of
      an authorized representative of the insurer, if required by law The Servicer
      must maintain a specimen of each policy and endorsement for which a certificate,
      evidence or declarations of insurance is maintained in lieu of the policy and
      endorsement. If the Servicer documents and tracks the master or blanket condominium
      homeowners association or Cooperative Corporation insurance policy maintained
      by a condominium homeowners association or Cooperative Corporation and can cross-reference
      to such policy each Condominium Unit Mortgage or Cooperative Share Loan the
      Servicer services for Freddie Mac in the Condominium Project or Cooperative
      Project that is covered by such policy, the Servicer need not maintain and track
      a separate insurance certificate for each such Condominium Unit Mortgage or
      Cooperative Share Loan. (b) Insurance policies for Condominium Projects and
      Cooperative Projects, including master or blanket coverage If the Servicer is
      unable to obtain evidence of insurance for a Borrower’s unit in a Condominium
      Project, Cooperative Project or a PUD insured under a master or blanket policy,
      one of the following insurance coverages obtained by the Servicer will meet
      the evidence of insurance requirements for the Borrower’s unit: ■ A blanket
      insurance policy carried by the Servicer that provides unit owner coverages
      as well as loss assessment coverage in the event of an uninsured loss for all
      Freddie Mac Condominium Unit Mortgages and Mortgages secured by units in a PUD
      and, if permitted by the Seller’s Purchase Documents, Cooperative Share Loans
      serviced by the Servicer ■ An agreement with an insurer to issue an insurance
      policy that provides unit owner coverage as well as loss assessment coverage
      in the event of an uninsured loss for all Freddie Mac Condominium Unit Mortgages,
      Mortgages secured by units in a PUD and, if permitted by the Seller’s Purchase
      Documents, Cooperative Share Loans serviced by the Servicer The blanket insurance
      policy or an agreement with an insurer to provide unit owner coverage as well
      as loss assessment coverage must meet the following requirements: ■ Be underwritten
      by an insurer with a current rating meeting the requirements outlined in Section
      4703.1 Freddie Mac Single-Family Seller/Servicer Guide Chapter 8202 As of 05/06/26
      Page 8202-8 ■ Provide coverage for the Servicer and/or Freddie Mac ■ Provide
      for at least 180 days’ written notice to the Servicer and, if applicable, Freddie
      Mac before canceling or terminating the coverage ■ Be approved by any regulatory
      authority to which the Servicer is subject, if such approval is required The
      Servicer must carry Mortgage impairment or mortgagee interest insurance if it
      elects not to maintain the documentation described above. The Mortgage impairment
      or mortgagee interest policy must meet the following requirements: ■ Be underwritten
      by an insurer with a current rating meeting the requirements outlined in Section
      4703.1 ■ Provide coverage for the Servicer and/or Freddie Mac ■ Provide coverage
      in scope and amounts at least equal to those required under Sections 2101.5
      and 2101.8 ■ Provide for at least 180 days’ written notice to the Servicer and,
      if applicable, Freddie Mac before canceling or terminating the coverage ■ Be
      approved by any regulatory authority to which the Servicer is subject, if such
      approval is required Having a blanket insurance policy providing unit owners
      coverage, an agreement with an insurer to provide unit owners coverage, Mortgage
      impairment or mortgagee interest policy does not relieve the Servicer of any
      of its Servicing obligations under the Purchase Documents, including the obligations
      to demonstrate to Freddie Mac that all the minimum insurance coverages required
      in Chapter 4703 and any other Purchase Document on a property securing a Mortgage
      serviced for Freddie Mac are indeed in force and to take all remedial actions
      required in this Chapter 8202 and any other Purchase Document when any such
      coverage is not in force. In addition to all other remedies of Freddie Mac provided
      for in the Purchase Documents, the Servicer will indemnify Freddie Mac for any
      loss Freddie Mac sustains due to the Servicer’s failure to verify that the required
      insurance is in force on the Mortgaged Premises. The Servicer’s obligation shall
      in no way be limited to the amount of coverage in force under a Mortgage impairment
      or mortgagee interest policy. Freddie Mac Single-Family Seller/Servicer Guide
      Chapter 8202 As of 05/06/26 Page 8202-9 8202.4: Evidence of insurance coverage
      requirements (Future effective date 01/01/27) This section contains information
      related to: ■ Required evidence of insurance coverage ■ Insurance policies for
      Condominiums Projects and Cooperative Projects, including master or blanket
      coverage (a) Required evidence of insurance coverage For each property securing
      a Mortgage owned by Freddie Mac, the Servicer must maintain evidence of all
      required insurance coverages in one of the following forms: ■ An original policy
      (including the Planned Unit Development (PUD) or condominium homeowners association,
      Cooperative Corporation or fee simple landowner/lessor’s policy under which
      the required coverages may be provided in whole or in part) and applicable endorsements
      ■ A copy of the original policy and applicable endorsements if the copy meets
      the requirements of Chapter 3302 ■ A certificate, evidence or declarations of
      insurance showing at least the following information: ❑ Name insured and mortgagee
      (where applicable, PUD or condominium homeowners association, Cooperative Corporation,
      fee simple landowner/lessor and PUD, or Condominium Unit, Cooperative Unit or
      ground lease community mortgagee for all units in which the mortgagee has an
      insurable interest) ❑ Property address ❑ Type, amount and effective dates of
      coverage ❑ Deductible amount and coverage to which each such deductible applies
      ❑ Any endorsement or optional coverage obtained and made part of the original
      policy ❑ Insurer’s agreement to provide at least 10 days’ notice to the mortgagee
      (including any applicable PUD or Condominium Unit or ground lease community
      leasehold mortgagee) before any reduction in coverage or cancelation of the
      policy; or for Cooperative Projects, 30 days’ notice to the mortgagee before
      cancelation ❑ Signature of an authorized representative of the insurer, if required
      by law Freddie Mac Single-Family Seller/Servicer Guide Chapter 8202 As of 05/06/26
      Page 8202-10 ■ Electronic data files that provide sufficient information to
      determine if a policy meets the minimum requirements outlined in Chapter 4703
      The Servicer must maintain a specimen of each policy and endorsement for which
      a certificate, evidence or declarations of insurance is maintained in lieu of
      the policy and endorsement. Servicers that rely on electronic data files to
      determine if a policy meets the minimum requirements outlined in Chapter 4703
      must have reasonable procedures in place to mitigate risks associated with not
      maintaining a specimen of each policy and endorsement, certificate, evidence
      or declarations of insurance. Servicers must provide legible hard copies of
      the complete insurance policies and proof of premium payments to Freddie Mac
      upon request. If the Servicer documents and tracks the master or blanket condominium
      homeowners association or Cooperative Corporation insurance policy maintained
      by a condominium homeowners association or Cooperative Corporation and can cross-reference
      to such policy each Condominium Unit Mortgage or Cooperative Share Loan the
      Servicer services for Freddie Mac in the Condominium Project or Cooperative
      Project that is covered by such policy, the Servicer need not maintain and track
      a separate insurance certificate for each such Condominium Unit Mortgage or
      Cooperative Share Loan. (b) Insurance policies for Condominium Projects and
      Cooperative Projects, including master or blanket coverage If the Servicer is
      unable to obtain evidence of insurance for a Borrower’s unit in a Condominium
      Project, Cooperative Project or a PUD insured under a master or blanket policy,
      one of the following insurance coverages obtained by the Servicer will meet
      the evidence of insurance requirements for the Borrower’s unit: ■ A blanket
      insurance policy carried by the Servicer that provides unit owner coverages
      as well as loss assessment coverage in the event of an uninsured loss for all
      Freddie Mac Condominium Unit Mortgages and Mortgages secured by units in a PUD
      and, if permitted by the Seller’s Purchase Documents, Cooperative Share Loans
      serviced by the Servicer ■ An agreement with an insurer to issue an insurance
      policy that provides unit owner coverage as well as loss assessment coverage
      in the event of an uninsured loss for all Freddie Mac Condominium Unit Mortgages,
      Mortgages secured by units in a PUD and, if permitted by the Seller’s Purchase
      Documents, Cooperative Share Loans serviced by the Servicer The blanket insurance
      policy or an agreement with an insurer to provide unit owner coverage as well
      as loss assessment coverage must meet the following requirements: Freddie Mac
      Single-Family Seller/Servicer Guide Chapter 8202 As of 05/06/26 Page 8202-11
      ■ Be underwritten by an insurer with a current rating meeting the requirements
      outlined in Section 4703.1 ■ Provide coverage for the Servicer and/or Freddie
      Mac ■ Provide for at least 180 days’ written notice to the Servicer and, if
      applicable, Freddie Mac before canceling or terminating the coverage ■ Be approved
      by any regulatory authority to which the Servicer is subject, if such approval
      is required The Servicer must carry Mortgage impairment or mortgagee interest
      insurance if it elects not to maintain the documentation described above. The
      Mortgage impairment or mortgagee interest policy must meet the following requirements:
      ■ Be underwritten by an insurer with a current rating meeting the requirements
      outlined in Section 4703.1 ■ Provide coverage for the Servicer and/or Freddie
      Mac ■ Provide coverage in scope and amounts at least equal to those required
      under Sections 2101.5 and 2101.8 ■ Provide for at least 180 days’ written notice
      to the Servicer and, if applicable, Freddie Mac before canceling or terminating
      the coverage ■ Be approved by any regulatory authority to which the Servicer
      is subject, if such approval is required Having a blanket insurance policy providing
      unit owners coverage, an agreement with an insurer to provide unit owners coverage,
      Mortgage impairment or mortgagee interest policy does not relieve the Servicer
      of any of its Servicing obligations under the Purchase Documents, including
      the obligations to demonstrate to Freddie Mac that all the minimum insurance
      coverages required in Chapter 4703 and any other Purchase Document on a property
      securing a Mortgage serviced for Freddie Mac are indeed in force and to take
      all remedial actions required in this Chapter 8202 and any other Purchase Document
      when any such coverage is not in force. In addition to all other remedies of
      Freddie Mac provided for in the Purchase Documents, the Servicer will indemnify
      Freddie Mac for any loss Freddie Mac sustains due to the Servicer’s failure
      to verify that the required insurance is in force on the Mortgaged Premises.
      The Servicer’s obligation shall in no way be limited to the amount of coverage
      in force under a Mortgage impairment or mortgagee interest policy. Freddie Mac
      Single-Family Seller/Servicer Guide Chapter 8202 As of 05/06/26 Page 8202-12
      8202.5: Servicer responsibilities to monitor insurance claims and disburse insurance
      loss proceeds (09/10/25) This section contains requirements related to: ■ Servicer
      responsibilities for insurance claims ■ Reporting damage to the Mortgaged Premises
      ■ Disbursing loss proceeds ■ Repair or reconstruction of the Mortgaged Premises
      ■ Final inspection of the Mortgaged Premises (a) Servicer responsibilities for
      insurance claims Upon notification of loss or damage to the Mortgaged Premises,
      the Servicer must monitor and coordinate the claim process with the Borrower
      and the insurer. The Servicer must take appropriate action to: ■ Verify the
      extent of the loss or damage ■ Ensure judicious disbursement of insurance proceeds
      for the necessary repairs ■ Protect the priority of the Mortgage by obtaining,
      where necessary, waivers of materialman’s or mechanic’s liens ■ Document details
      concerning the loss or damage, completion of the repairs and disposition of
      the insurance proceeds in the Mortgage file ■ Prohibit payment of fees out of
      the insurance loss proceeds to any public adjuster or other third party retained
      by the Borrower to assist with the recovery of those proceeds unless agreed
      to by Freddie Mac in writing ■ Refer to Chapter 8403 for additional requirements
      on Abandoned Properties (as defined in Section 8403.1), distressed properties
      or properties that pose a Risk of Property Ownership Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 8202 As of 05/06/26 Page 8202-13 (b) Reporting
      damage to the Mortgaged Premises The Servicer does not need to submit a report
      and related recommendations to Freddie Mac unless: ■ The Mortgage is in foreclosure
      ■ The Mortgaged Premises is abandoned and/or has been acquired by the Servicer
      through foreclosure or deed-in-lieu of foreclosure. (See Section 9603.1(d)(ii))
      for remittance requirements for insurance loss settlements.) ■ The insured improvements
      have suffered a total or near total loss ■ The insured improvements cannot be
      rebuilt ■ The Servicer wishes to apply insurance proceeds to the Mortgage debt
      instead of repairing the property, or ■ Insurance proceeds exceed the amounts
      required to restore the property to its original condition If any of the above
      conditions exist, the Servicer must submit the recommendation along with the
      appropriate documentation to Freddie Mac (see Directory 5) within five Business
      Days of learning of the situation. (c) Disbursing loss proceeds If a Servicer
      receives an insurance claim check for contents or living expenses, the Servicer
      must release the insurance funds to the Borrower without delay. When the Mortgaged
      Premises has suffered a loss, the Servicer must follow the requirements in the
      below table for releasing proceeds: Requirements for releasing loss proceeds
      Insurance loss draft Mortgage current or less than 31 days delinquent at the
      time of loss Mortgage 31 or more days delinquent at the time of loss Initial
      loss draft The Servicer may release insurance proceeds up to the greater of:
      If the proceeds are less than or equal to $5,000, the Servicer may disburse
      in one payment. Freddie Mac Single-Family Seller/Servicer Guide Chapter 8202
      As of 05/06/26 Page 8202-14 Requirements for releasing loss proceeds Insurance
      loss draft Mortgage current or less than 31 days delinquent at the time of loss
      Mortgage 31 or more days delinquent at the time of loss ■ $40,000 ■ 33% of insurance
      proceeds or ■ The amount by which the release funds exceed the sum of the UPB,
      accrued interest and advances on the Mortgage If the proceeds are greater than
      $5,000, the Servicer may make an initial disbursement of 25% of the insurance
      proceeds but no more than the greater of: ■ $10,000 or ■ The amount by which
      the release funds exceed the sum of the UPB, accrued interest and advances on
      the Mortgage Additional loss drafts The Servicer may distribute remaining funds
      based on the repair plan reviewed and approved by the Servicer. The Servicer
      may distribute remaining funds in increments not to exceed 25% of the insurance
      loss proceeds. Inspections The Servicer must inspect repairs prior to release
      of any remaining funds. For Mortgages that were current or less than 31 days
      delinquent at the time of loss, the Servicer may use either physical/onsite
      inspections or remote inspections to confirm the progress or completion of repairs
      at the property. The Servicer may use Borrower-submitted photos and/or video,
      or conduct Servicer-directed video calls with the Borrower to document the progress
      or completion of repairs at the property if the Servicer can, when conducting
      such inspections: ■ Determine the documented repairs are from the location of
      the property ■ Authenticate when any Borrower-submitted photos or video were
      taken and that such photos or video were not altered in any way, and ■ Clearly
      identify the repairs that are being documented and confirm the repairs (a) were
      completed in accordance with the insurance adjuster’s itemized estimate and
      the repair plan, and (b) do not affect the safety, soundness or structural integrity
      of the property or the ability to obtain an occupancy permit Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 8202 As of 05/06/26 Page 8202-15 Requirements
      for releasing loss proceeds Insurance loss draft Mortgage current or less than
      31 days delinquent at the time of loss Mortgage 31 or more days delinquent at
      the time of loss For remote inspections conducted by video call with the Borrower,
      the Servicer must also retain video or photo records of the call that clearly
      document the Servicer’s compliance with the above requirements. For Mortgages
      that are more than 31 days delinquent at the time of loss, Servicers must schedule
      physical inspections to confirm the progress or completion of repairs. Funds
      payable The Servicer may issue insurance proceeds payable only to the Borrower.
      A Servicer may unilaterally apply the insurance proceeds to the Mortgage’s unpaid
      balance only to the extent allowed by applicable law and the Security Instrument.
      The Borrower, however, may unilaterally decide to have the proceeds applied
      to the Mortgage’s unpaid balance. If repair or reconstruction of the residence
      is expected to take more than three months, insurance funds retained by the
      Servicer pending disbursement for such repair or reconstruction must be maintained
      in a federally insured account that pays interest to the Borrower. The Servicer
      may be named as loss payee on insurance drafts and must comply with any applicable
      law and, where applicable, any requirement of the FHA, VA, RHS or MI. (d) Repair
      or reconstruction of the Mortgaged Premises In overseeing the repair or reconstruction
      of damaged or destroyed residences, the Servicer should, to the extent applicable,
      practicable and required, ascertain that: ■ The contractor chosen by the Borrower
      to repair or reconstruct the residence is: ❑ Qualified and experienced to perform
      the types of work contracted ❑ Financially able to complete the repair or reconstruction
      within scheduled time frames ■ The plans and specifications for the work contracted:
      Freddie Mac Single-Family Seller/Servicer Guide Chapter 8202 As of 05/06/26
      Page 8202-16 ❑ Describe repair or reconstruction that is generally consistent
      with the damage or destruction suffered by the residence, as reported in the
      proof of loss filed by the Borrower with the property insurer and as documented
      by the insurer’s adjuster ❑ Establish a reasonable schedule for completion of
      each phase of repair or reconstruction ■ The Borrower and the contractor have
      executed a contract by which they agree to the following: ❑ The contractor will
      perform the work described in the plans and specifications ❑ The contractor
      will comply with applicable codes and regulations governing residential repair
      or reconstruction (including, but not limited to, building codes and zoning,
      permit and inspection regulations). These codes and regulations may vary from
      State to State and, within the same State, from county to county. Therefore,
      Servicers should have adequate measures in place to verify contractors’ and
      inspectors’ compliance certifications to protect Freddie Mac’s and the Servicer’s
      respective investments. If additional funds are needed to bring a damaged or
      destroyed residence into compliance with applicable codes and regulations, the
      Borrowers should determine whether their property insurer will waive any policy
      provision restricting payment for the increased cost of construction resulting
      from enforcement of codes and regulations. ❑ A specified dollar amount is the
      maximum amount that the contractor may charge for the work ❑ The contractor
      will be paid a specified advance (if applicable, usually not exceeding 10% of
      the total contract amount) and, subsequently, on a specified draw schedule contingent
      on verification of satisfactory completion of specified work phases. If the
      Mortgage status at time of notification is 31 or more days delinquent at time
      of loss, released funds must not exceed 25% increments of insurance loss proceeds.
      ❑ The contractor, its subcontractors and its material suppliers will provide
      written acknowledgment of payment for work performed and materials supplied
      and the necessary lien waivers or releases so that the Mortgaged Premises may
      remain clear of all such liens and encumbrances ■ Each scheduled work phase
      has been satisfactorily completed in accordance with the plans and specifications
      in the contract The Servicer may choose to have the above-described oversight
      functions performed by its staff or by a third party (such as a specialized
      firm or another Servicer). However, the Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 8202 As of 05/06/26 Page 8202-17 Servicer is liable for the performance
      of any third party it retains. The third party may be compensated from insurance
      proceeds retained by the Servicer only to the extent agreed to by the Borrower
      and allowed under applicable law. (e) Final inspection of the Mortgaged Premises
      The Servicer must follow the requirements below regarding the final inspection.
      Requirements for final inspection Mortgage current or less than 31 days delinquent
      at the time of loss Mortgage 31 or more days delinquent at the time of loss
      A final inspection is not required. A final inspection is always required to
      ensure all repairs are completed.'
  judgment: false
