source:
  type: guide
  id: fnma-sel-b7-3-05
  authority: Fannie Mae Selling Guide B7-3-05 — Additional Insurance Requirements
  description: Fannie Mae Selling Guide B7-3-05 — Additional Insurance Requirements.
  coverage_tier: operative
obligations:
- id: fnma-sel-b7-3-05-full
  canonical_id: fnma-sel-b7-3-05-full
  section: Fannie Mae Selling Guide B7-3-05 — Additional Insurance Requirements
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B7-3-05 — Additional Insurance Requirements
    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: 'B7-3-05, Additional Insurance Requirements (12/14/2022) Introduction
      This topic contains information on additional insurance requirements, including:
      Additional Property Insurance Coverage Insurance Requirements for Renovation
      and Energy-Related Improvement Loans Optional Credit Life or Mortgage Loan Insurance
      Additional Property Insurance Coverage If a lender or servicer becomes aware
      of a subject property''s exposure to perils that are not covered as required
      in Coverage Requirements in B7-3-02, Property Insurance Requirements for One-to
      Four-Unit Properties, or Coverage Requirements in B7-3-03, Master Property Insurance
      Requirements for Project Developments, such as toxic waste; it should contact
      Fannie Mae to determine whether additional coverage is necessary. Servicers
      should contact their Fannie Mae Servicing Representative (see Servicing Guide,
      F-4-02, List of Contacts) and lenders should contact their Fannie Mae Account
      Team (see E-1-02, List of Contacts). Insurance Requirements for Renovation and
      Energy-Related Improvement Loans When the loan provides funds to cover the costs
      of repairs, remodeling, renovations, or energy-related improvements, there must
      not be any coverage exclusions or limitations related to the renovation work
      during the time that work is being performed on the property. Once repairs,
      renovation, or construction is complete, the lender or servicer must review
      the property insurance policy (and ﬂood insurance policy when required) to ensure
      the appropriate coverage is in place based on the completed replacement cost
      value of the subject property. Optional Credit Life or Mortgage Loan Insurance
      Fannie Mae allows insurance policies that include optional coverage such as
      those outlined below. However, Fannie Mae does not pay costs arising from disputes
      with insurers in settling claims that relate only to this optional coverage.
      Acceptable Types of Optional Credit Life or Mortgage Loan Insurance Permissible
      coverage includes: single-premium credit insurance policies and debt cancellation
      agreements that are free in all respects to the borrower, single-premium mortgage
      insurance policies with a credit insurance feature where such credit insurance
      feature is free in all respects to the borrower, and credit insurance policies
      that require borrowers to pay a separately identiﬁed premium on a monthly or
      Published May 6, 2026 871 annual basis or debt cancellation agreements that
      require borrowers to pay a separately identiﬁed fee on a monthly basis. These
      credit insurance policies or debt cancellation agreements must be disclosed
      to the borrower in clear and simple terms in advance of purchase of the applicable
      policy or agreement. Notwithstanding the lender''s or servicer''s compliance
      with the above requirements, Fannie Mae purchases loans with debt cancellation
      agreements only with Fannie Mae''s express written approval of the overall debt
      cancellation feature. This includes the debt cancellation agreement, and execution
      by the lender or servicer and Fannie Mae of a separately negotiated agreement.
      The lender or servicer may act as a broker or agent in the sale of this type
      of credit insurance to the borrower. The lender or servicer must reimburse Fannie
      Mae for attorney''s fees or any costs that it incurs if Fannie Mae brings an
      action on a defaulted loan and the borrower defends against Fannie Mae''s foreclosure
      or acts to enjoin Fannie Mae from liquidating the loan and one of the defenses
      or actions for injunction is based on: an obligation of the lender or servicer
      (including as the broker or agent that obtained the credit insurance for the
      borrower and/or as a party that has agreed to collect premiums and remit them
      to the credit insurer on the borrower''s behalf), an obligation of the credit
      insurer, or the obligation of the mortgage insurer to maintain credit insurance
      and apply beneﬁts thereof to the borrower''s loan. Unacceptable Types of Optional
      Credit Life or Mortgage Loan Insurance Although certain property insurance policies
      that include optional coverage are allowed, Fannie Mae does not purchase loans
      in the following situations: The premium/fee for single-premium credit life
      insurance policies or debt cancellation agreements is paid directly by the borrower
      or paid indirectly by ﬁnancing the premium/fee into the loan amount. The premium/fee
      for single-premium mortgage insurance policies with a credit insurance feature
      is paid directly by the borrower or paid indirectly by rolling the credit insurance
      single premium into the cost of the mortgage insurance (whether or not it is
      identiﬁed as including a credit insurance premium). Recent Related Announcements
      The table below provides references to recently issued Announcements that are
      related to this topic. Announcements Issue Date Announcement SEL-2022-10 December
      14, 2022 Announcement SEL-2021-11 December 15, 2021 Announcement SEL-2020-07
      December 16, 2020 Published May 6, 2026 872'
  judgment: false
