source:
  type: guide
  id: fnma-svc-b-5-01
  authority: Fannie Mae Servicing Guide B-5-01 — Insured Loss Events
  description: Fannie Mae Servicing Guide B-5-01 — Insured Loss Events.
  coverage_tier: operative
obligations:
- id: fnma-svc-b-5-01-full
  canonical_id: fnma-svc-b-5-01-full
  section: Fannie Mae Servicing Guide B-5-01 — Insured Loss Events
  type: do
  tags:
  - regulator-direct
  - fnma
  - servicing-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Servicing Guide B-5-01 — Insured Loss Events
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/servicing-guide
    snapshot_id: cf63a82bbb4adfba
    fetched_at: '2026-05-22T23:53:19Z'
    content_hash: sha256:89df66c43baad07f8a8dd9d224492fff7d15e8839edba02ad0e74c7e50fe5da3
    paragraph_quote: 'B-5-01, Insured Loss Events (07/12/2023) Introduction This topic
      contains the following: Servicer Responsibilities Responsibilities For All Properties
      that Can Be Legally Rebuilt Disbursing Insurance Loss Proceeds Based on the
      Mortgage Loan Status and the Borrower''s Intent Published May 13, 2026 179 Performing
      Remote Insured Loss Repair Inspections Depositing the Insurance Loss Proceeds
      Not Disbursed Servicer Responsibilities When a property securing a mortgage
      loan experiences an insured loss, the servicer must ensure the proof of loss
      claim is ﬁled within the time period speciﬁed in the insurance policy and monitor
      the disbursement of insurance loss proceeds (see Disbursing Insurance Loss Proceeds
      Based on the Mortgage Loan Status and the Borrower’s Intent for additional information).
      Note: If the servicer is unable to establish contact with the borrower, the
      servicer must contact the insurance carrier to determine whether the borrower
      has ﬁled the proof of loss claim. If the borrower has not ﬁled the claim, the
      servicer must ﬁle a proof of loss claim under the standard mortgagee clause
      and collect the insurance loss proceeds on Fannie Mae''s behalf. If a property
      inspection reveals an insurable loss event and the proof of loss claim is not
      ﬁled, is denied, or is curtailed due to the servicer’s failure to ﬁle a timely
      claim, the servicer must make Fannie Mae whole for any losses relating to the
      property damage, expenses, or fees Fannie Mae incurs. Additional responsibilities
      depend upon whether the property can be legally rebuilt, as described in the
      following table. If… Then the servicer must… the property cannot be legally
      rebuilt use any insurance loss proceeds to reduce the outstanding mortgage loan
      debt. the property can be legally rebuilt follow the instructions in Responsibilities
      for All Properties that Can Be Legally Rebuilt and determine the appropriate
      actions based on the status of the mortgage loan at the time of the loss event,
      as described in Disbursing Insurance Loss Proceeds Based on the Mortgage Loan
      Status and the Borrower''s Intent. Responsibilities For All Properties that
      Can Be Legally Rebuilt The following table provides a list of the servicer''s
      responsibilities when there is an insurable loss on a property securing a mortgage
      loan and the property can be legally rebuilt. Published May 13, 2026 180 ✓ The
      servicer must… Document details on the damages or cause of loss to the property.
      Discuss with the borrower any plans for repairing the property. Note: If the
      servicer is unable to establish contact with the borrower or the property is
      abandoned, the servicer must ensure the property is maintained and secured by
      complying with the requirements in D2-2-10, Requirements for Performing Property
      Inspections and the Property Preservation Matrix and Reference Guide. Immediately
      issue the borrower a check for any amount of insurance loss proceeds designated
      for contents (for example, personal property) or living expenses. Deposit any
      insurance loss proceeds not disbursed into an interest-bearing account (see
      Depositing the Insurance Loss Proceeds Not Disbursed for additional information).
      Ensure any property inspection report accurately assesses the condition of the
      property, is dated, and identiﬁes the mortgagor(s) and the property address.
      Obtain the proper lien releases, if applicable. Prohibit payment of fees out
      of the insurance loss proceeds to any public adjusters or other third parties
      retained by the borrower to assist with the recovery of those proceeds, unless
      otherwise agreed to by Fannie Mae in writing. Note: If the servicer determines
      that payment to a third party is warranted to protect the security interest
      of the property and/or beneﬁt of the borrower, the servicer must request prior
      approval by submitting a Report of Property Insurance Loss (Form 176) to Fannie
      Mae''s SF CPM Division (see F-4-02, List of Contacts). The request must include
      the mortgage loan and property information, a description of the speciﬁc damage
      or loss, details of the insurance claim, and a business justiﬁcation for the
      request. Disburse any insurance loss proceeds based on the requirements in this
      Guide without regard to whether supplemental loss proceeds will be received.
      Note: The servicer and/or the insurance company may not have reason to believe
      that a supplemental claim will be ﬁled for additional damages at the time the
      initial loss proceeds are paid by the insurer. Disbursing Insurance Loss Proceeds
      Based on the Mortgage Loan Status and the Borrower''s Intent Published May 13,
      2026 181 The servicer must release the insurance loss proceeds received from
      the insurance carrier based on the status of the mortgage loan at the time of
      the loss event and whether the borrower intends to repair the property. Mortgage
      Loans Current or Less Than 31 Days Delinquent If a mortgage loan is current
      or less than 31 days delinquent at the time of the loss event, then the servicer
      is authorized to release an initial disbursement of insurance loss proceeds
      up to the greater of $40,000; 33% of the insurance loss proceeds; or the amount
      by which the release funds exceed the sum of the UPB, accrued interest, and
      advances on the mortgage loan; and disburse any remaining funds based on periodic
      inspections of the progress of the repair work. If multiple disbursements of
      insurance loss proceeds are required, the servicer must also review and approve
      the ﬁnal plans for repair, including obtaining the necessary bids to repair
      the property; and monitor and inspect repairs as completed to verify the repairs
      comply with the ﬁnal repair plan. Note: A ﬁnal inspection is not required. Note:
      If the borrower has made advance payments to the contractor and/or to purchase
      materials, then the servicer is authorized to reimburse the borrower by releasing
      insurance loss proceeds as evidenced by paid receipts. Receipts are not necessary
      if the loss proceeds are less than or equal to $40,000. Mortgage Loans 31 Days
      or More Delinquent The servicer must evaluate the borrower for a workout option
      in accordance with D2-3.1-01, Determining the Appropriate Workout Option and
      disburse the insurance loss proceeds as outlined in the following table. If
      the insurance loss proceeds are… Then the servicer… less than or equal to $5,000
      is authorized to make the disbursement in one payment. Published May 13, 2026
      182 If the insurance loss proceeds are… Then the servicer… greater than $5,000
      • is authorized to release an initial disbursement of insurance loss proceeds
      of 25% of the total insurance loss 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 loan; and • is authorized
      to disburse the remaining funds in increments not to exceed 25% of the insurance
      loss proceeds following inspection of the repairs. Regardless of the disbursement
      amount or schedule, the servicer must review and approve the ﬁnal plans for
      repair, including obtaining the necessary bids to repair the property; monitor
      and inspect repairs as completed to verify the repairs comply with the ﬁnal
      repair plan; and conduct a ﬁnal inspection to ensure all repairs are completed.
      Mortgage Loans for Properties that are Abandoned and/or Have a Scheduled Foreclosure
      Sale Date If the borrower wants to repair or restore the property, then the
      servicer must take the actions described in the following table. ✓ The servicer
      must… Evaluate the borrower for a workout option in accordance with D2-3, Fannie
      Mae’s Home Retention and Liquidation Workout Options. Follow the requirements
      in D2-2-10, Requirements for Performing Property Inspections and the Property
      Preservation Matrix and Reference Guide to ensure the property is maintained
      and preserved. Submit a Report of Property Insurance Loss (Form 176) to Fannie
      Mae’s SF CPM division (see F-4-02, List of Contacts within ﬁve business days
      of the servicer receiving notiﬁcation of the damages. When the Borrower Does
      Not Intend to Make Repairs If a borrower does not want to repair or restore
      the property, the servicer must take the actions described in the following
      table. Published May 13, 2026 183 ✓ The servicer must… Follow the requirements
      in D2-2-10, Requirements for Performing Property Inspections and the Property
      Preservation Matrix and Reference Guide to ensure the property is maintained
      and preserved. Submit Form 176 to Fannie Mae’s SF CPM division (see F-4-02,
      List of Contacts within ﬁve business days of learning of the borrower’s intent
      not to repair or restore the property. Take the action described in the following
      table depending on eligibility for a workout option. If... Then... the borrower
      is eligible for a workout option in accordance with D2-3, Fannie Mae’s Home
      Retention and Liquidation Workout Options ensure the borrower has assigned any
      insurance loss proceeds to Fannie Mae, if required. the borrower is not eligible
      for a workout option in accordance with D2-3, Fannie Mae’s Home Retention and
      Liquidation Workout Options, but the servicer has determined that a workout
      option is appropriate submit the case to Fannie Mae for review through Fannie
      Mae''s servicing solutions system. the mortgage loan progresses to foreclosure
      sale follow the requirements in E-3.3-05, Issuing Bidding Instructions for determining
      the foreclosure sale bid amount. The servicer must remit insurance loss proceeds
      to Fannie Mae depending upon the circumstance of the mortgage loan, as outlined
      in the following table. If the mortgage loan progresses to a… Then the servicer
      must… short sale at closing, remit the remaining balance of any insurance loss
      proceeds via CRS using remittance code 332. Mortgage Release or foreclosure
      sale • remit the remaining balance of any insurance loss proceeds the servicer
      is maintaining on a mortgage loan within 30 days of conﬁrming the REOgram via
      CRS using remittance code 332, and • wire any insurance loss proceeds that were
      a result of a claim ﬁled by Fannie Mae''s property recovery ﬁrm or that were
      received by the servicer after conﬁrming the REOgram to Fannie Mae within 10
      business days of receipt. Note: The servicer must not issue any insurance loss
      proceeds to pay fees to its property recovery ﬁrm or any other servicer expenses,
      and Fannie Mae will not reimburse fees to any servicer''s property recovery
      ﬁrm or for any other related servicer expense. Insured Loss Repair Inspection
      Costs: The servicer is authorized to request reimbursement for insured loss
      repair inspection costs incurred on current and delinquent mortgage loans when
      required to disburse additional funds or complete a ﬁnal inspection of Published
      May 13, 2026 184 repairs. To request reimbursement, the servicer must follow
      the procedures in Reimbursement for Property Inspections and Property Preservation
      Expenses in F-1-05, Expense Reimbursement. Performing Remote Insured Loss Repair
      Inspections For mortgage loans that are current or less than 31 days delinquent
      at the time of the loss event, the servicer is authorized to use borrower-submitted
      photos and/or video, or conduct servicer-directed video calls with the borrower
      to document the progress or completion of repairs of the property, provided
      that the conditions listed in the following table are met. ✓ The photo and/or
      video must… Allow the servicer to determine the repairs are from the location
      of the property. Authenticate when taken and that such photos or video were
      not altered in any way. Clearly identify the repairs that are being documented
      and conﬁrm the repairs • were completed in accordance with the insurance adjuster’s
      itemized estimate and the repair plan, and • do not aﬀect the safety, soundness
      or structural integrity of the property or the ability to obtain an occupancy
      permit. Note: For remote inspections conducted by video call with the borrower,
      the servicer must retain video and/or photo records of the call that clearly
      document the servicer’s compliance with the above requirements. Depositing the
      Insurance Loss Proceeds Not Disbursed The servicer must deposit the insurance
      loss proceeds not disbursed to the borrower in an interest-bearing account.
      The following table provides a list of account requirements. ✓ The interest-bearing
      account must… Be a T&I custodial account with a depository institution that
      meets Fannie Mae’s eligibility criteria for custodial depositories. Be for the
      borrower’s beneﬁt. Yield interest equivalent to the interest the borrower could
      expect to obtain from a savings or money market account. Published May 13, 2026
      185 The servicer must pay the accumulated interest to the borrower once the
      repairs to the property have been completed, unless the borrower requests an
      earlier disbursement of the interest, or applicable law allows for the accumulated
      interest to be applied to the UPB. Note: See Establishing Written Policies or
      Procedures in A4-1-01, Staﬃng, Training, Procedures, and Quality Control Requirements
      and A4-1-02, Establishing Custodial Bank Accounts for additional details, including
      requirements for addressing unapplied funds held in the T&I custodial account
      and for reporting the status of funds in the custodial account 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 SVC-2023-04 July 12, 2023 Announcement SVC-2021-04 July 14, 2021
      Announcement SVC-2021-02 March 10, 2021 Announcement SVC-2020-03 July 15, 2020
      Announcement SVC-2019-02 April 10, 2019'
  judgment: false
