source:
  type: guide
  id: fhlmc-4703.3
  authority: Freddie Mac Single-Family Seller/Servicer Guide Section 4703.3 — Flood
    insurance
  description: Freddie Mac Single-Family Seller/Servicer Guide Section 4703.3 — Flood
    insurance.
  coverage_tier: operative
obligations:
- id: fhlmc-4703.3-full
  canonical_id: fhlmc-4703.3-full
  section: Freddie Mac Single-Family Seller/Servicer Guide Section 4703.3 — Flood
    insurance
  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 4703.3 — Flood
      insurance
    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: '4703.3: Flood insurance (06/01/24) (a) Determining if a property
      requires flood insurance A flood zone determination (FZD) must be made for each
      property securing a Mortgage sold to Freddie Mac. An FZD must be documented
      by a completed FEMA Standard Flood Hazard Determination Form, FEMA Form 086-0-032
      (Exhibit 13, Standard Flood Hazard Determination Form [SFHDF]) in accordance
      with federal law. The SFHDF may be used in a printed, computerized or electronic
      manner and must be retained for the life of the Mortgage in either hard copy
      or electronic format. Any alternative electronic format must contain all mandatory
      fields indicated on the SFHDF. The date in the “Date of Determination” field
      on the SFHDF must be a date that is no more than 120 days before the Note Date
      of the Mortgage, or, if applicable, the Note Date of the refinance Mortgage.
      However, the “Date of Determination” field on the SFHDF may be a date that is
      more than 120 days before the Note Date of the Mortgage or, if applicable, the
      Note Date of the refinance Mortgage, if the Seller uses a “life of loan” FZD
      where the third party providing the FZD provides a “life of loan” certificate
      assuring that the Mortgage is monitored for compliance. The loan number or other
      identifying information in the “Loan Identifier” field on the SFHDF must be
      the loan number or other identifying information for the Mortgage or, if applicable,
      the refinance Mortgage. The Seller/Servicer warrants that any FZD made by a
      party other than the Seller/Servicer is guaranteed by the FZD maker to be accurate,
      in accordance with federal law. The Seller/Servicer, however, remains responsible
      to Freddie Mac for the accuracy of any FZD made by the Seller/Servicer or any
      party other than the Seller/Servicer. If the SFHDF identifies the insurable
      improvements on the Mortgaged Premises as located in an area that has been identified
      as a Special Flood Hazard Area (SFHA) containing the letter “A” or “V” within
      its designated zone on a flood map (Flood Hazard Boundary Map or Flood Insurance
      Rate Map) of FEMA, the Seller/Servicer must ensure that flood insurance is obtained
      and maintained on such improvements for the term of the Mortgage. The Seller/Servicer
      may waive or discontinue the flood insurance requirement if: ■ The Borrower
      and the Seller/Servicer have obtained, following a joint request to FEMA as
      provided under federal law, a Letter of Determination Review (LODR) concluding
      that the insurable improvements are not in the SFHA, or ■ The Borrower has provided
      the Seller/Servicer with a Letter of Map Amendment (LOMA) from FEMA excluding
      the insurable improvements or the entire property from the SFHA, or Freddie
      Mac Single-Family Seller/Servicer Guide Chapter 4703 As of 05/06/26 Page 4703-27
      ■ The Borrower has provided the Seller/Servicer with a Letter of Map Revision
      (LOMR) from FEMA removing the community’s SFHA designation The Borrower must
      maintain flood insurance on the insurable improvements until FEMA issues a LOMA,
      LOMR or LODR. Upon issuance of a LOMA, LOMR or LODR, the Borrower may request
      from FEMA a refund of paid flood insurance premiums through the insurance agent
      servicing the flood insurance policy. A copy of the LOMA, LOMR or LODR, as applicable,
      must be maintained in the Mortgage file in accordance with Chapters 3401, 3301
      and 3302. If the insurable improvements on the Mortgaged Premises are located
      in an SFHA but the community does not participate in the National Flood Insurance
      Program (NFIP) (“nonparticipating community”), the Mortgage is not eligible
      for sale to Freddie Mac. If the insurable improvements on the Mortgaged Premises
      are located in an area that has not been mapped by FEMA and the Seller/Servicer
      is not aware of any flood risks to which the improvements are exposed, the Mortgage
      is eligible for sale to Freddie Mac without the benefit of flood insurance.
      If the area has not been mapped by FEMA but the Seller/Servicer is aware that
      the insurable improvements are exposed to flood risks, the Mortgage is not eligible
      for sale to Freddie Mac without flood insurance on the improvements. (b) Acceptable
      flood insurance policies The flood insurance policy may be one of the following:
      ■ A standard policy issued by the NFIP, or ■ A policy issued by a private insurer
      that is qualified under Section 4703.1, with at least equivalent terms and conditions
      to the standard NFIP policy for the types of improvements insured, including
      coverage, deductibles and exclusions and conditions offered (c) Coverage required
      (i) 1- to 4-unit properties If the community where the Mortgaged Premises are
      located participates in the Emergency Program of the NFIP, the flood insurance
      coverage on the insurable improvements must at least equal the lowest of the
      following: ■ The UPB of the Mortgage ■ The maximum amount of coverage currently
      sold under the Emergency Program of the NFIP for the type of improvements insured
      Freddie Mac Single-Family Seller/Servicer Guide Chapter 4703 As of 05/06/26
      Page 4703-28 ■ The replacement cost of the insurable improvements The Seller/Servicer
      must ensure that the Borrower increases flood insurance coverage on the insurable
      improvements when the community moves into the Regular Program of the NFIP as
      described below. If the community where the Mortgaged Premises are located participates
      in the Regular Program of the NFIP, the flood insurance coverage on the insurable
      improvements must at least equal the lowest of the following: ■ The UPB of the
      Mortgage ■ The maximum amount of coverage currently sold under the Regular Program
      of the NFIP for the type of improvements insured ■ The replacement cost of the
      insurable improvements The deductible may not exceed the maximum deductible
      amount currently allowed under the NFIP for the type of improvements insured.
      For 1- to 4-unit properties, the Seller/Servicer may waive the flood insurance
      requirements for structures on the Mortgaged Premises that are detached from
      the primary residential structure and do not serve as a residence. (ii) PUD
      or ground lease community units Flood insurance requirements for 1- to 4-unit
      properties apply to similar residential properties within a PUD or ground lease
      community. (iii) Condominium Units Flood insurance requirements for 1- to 4-unit
      properties apply to similar residential properties in a 2- to 4-Unit Condominium
      Project or Detached Condominium Project. If the Condominium Unit securing a
      Mortgage sold to or serviced for Freddie Mac is in a building in a Condominium
      Project other than a 2- to 4-Unit Condominium Project or Detached Condominium
      Project and all or part of the building is in an SFHA, the following flood insurance
      coverage, as applicable, is required: A. Condominium homeowners association’s
      coverage The condominium homeowners association must maintain building coverage
      on the building for the lower of: (i) 80% of the building’s replacement cost
      or Freddie Mac Single-Family Seller/Servicer Guide Chapter 4703 As of 05/06/26
      Page 4703-29 (ii) The maximum coverage amount available from NFIP per unit The
      condominium owners association must maintain contents coverage on the building
      for the lower of (i) the actual cash value of the contents in the building that
      are owned in common by the association members or (ii) the maximum amount of
      contents coverage sold by the NFIP for a condominium building. The deductible
      of the condominium owners association’s coverage may not exceed the maximum
      deductible amount currently allowed under the NFIP for condominium association
      building coverage. The deductible for association building contents may not
      exceed the maximum deductible amount currently allowed under the NFIP for association
      building contents. B. Unit owner’s coverage To the extent the condominium owners
      association’s building coverage meets the minimum requirements above, but the
      Condominium Unit allocation does not meet the 1- to 4-unit coverage requirement,
      the Borrower must maintain supplemental coverage on the Condominium Unit. The
      coverage must be at least equal to the difference between the condominium associations’
      building coverage allocated to that Condominium Unit and the amount required
      on a 1- to 4-unit property. The deductible may not exceed the maximum deductible
      allowed for a 1- to 4-unit property. (iv) Cooperative Corporations The Cooperative
      Corporation must maintain flood insurance on each building that is located in
      an SFHA. The building coverage must be the lower of (i) 100% of the building’s
      replacement cost, or (ii) the maximum amount of building coverage sold by the
      NFIP. The contents coverage must be the lower of (i) 100% of the insurable replacement
      cost of all contents owned by the Cooperative Corporation, or (ii) the maximum
      amount of contents coverage sold by the NFIP. The deductible of the Cooperative
      Corporation coverage may not exceed the maximum deductible amount currently
      allowed under NFIP for building coverage. The deductible for Cooperative Corporation
      building contents may not exceed the maximum deductible amount currently allowed
      under the NFIP for contents coverage. A blanket policy of flood insurance covering
      more than one building or structure in the Cooperative Project is acceptable
      if each building or structure covered by the blanket policy is insured for at
      least the individual building and contents limits stated above. Freddie Mac
      Single-Family Seller/Servicer Guide Chapter 4703 As of 05/06/26 Page 4703-30
      4703.4: Liability insurance for Condominium Projects and Cooperative Projects
      (07/09/25) Effective June 10, 2020, the content of this section has moved from
      Section 8202.3(a). Liability insurance is required for all Condominium Projects
      and Cooperative Projects, except the following: ■ Condominium Projects reviewed
      under the streamlined project review type in Section 5701.4 ■ Condominium Projects
      and Condominium Unit Mortgages that meet the requirements in Section 5701.7
      and are delivered as Exempt From Review ■ Cooperative Share Loans that meet
      the requirements in Section 5701.7 and are delivered as Exempt From Review ■
      Freddie Mac Enhanced Relief Refinance® Mortgages The condominium homeowners
      association or Cooperative Corporation must maintain commercial general liability
      (CGL) insurance covering all common areas, Common Elements, commercial spaces
      and public ways in the Condominium Project or Cooperative Project. If not already
      included in the terms of the CGL coverage, there must be a “severability of
      interest” endorsement precluding the insurer’s denial of a unit owner’s claim
      because of negligent acts by the association, corporation or other unit owners.
      The insurer’s limit of liability per occurrence for personal injury, bodily
      injury or property damage under the terms of the above coverages must be at
      least $1 million and the coverage must provide for claim settlements on an occurrence
      basis. 4703.4: Liability insurance for Condominium Projects and Cooperative
      Projects (Future effective date 08/03/26) Effective for Mortgages with Application
      Received Dates on or after August 3, 2026. Liability insurance is required for
      all Condominium Projects and Cooperative Projects, except the following: ■ Condominium
      Projects and Condominium Unit Mortgages that meet the requirements in Section
      5701.7 and are delivered as Exempt From Review Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 4703 As of 05/06/26 Page 4703-31 ■ Cooperative Share Loans that
      meet the requirements in Section 5701.7 and are delivered as Exempt From Review
      ■ Freddie Mac Enhanced Relief Refinance® Mortgages The condominium homeowners
      association or Cooperative Corporation must maintain commercial general liability
      (CGL) insurance covering all common areas, Common Elements, commercial spaces
      and public ways in the Condominium Project or Cooperative Project. If not already
      included in the terms of the CGL coverage, there must be a “severability of
      interest” endorsement precluding the insurer’s denial of a unit owner’s claim
      because of negligent acts by the association, corporation or other unit owners.
      The insurer’s limit of liability per occurrence for personal injury, bodily
      injury or property damage under the terms of the above coverages must be at
      least $1 million and the coverage must provide for claim settlements on an occurrence
      basis. 4703.5: Fidelity or employee dishonesty insurance for Condominium Projects
      and Cooperative Projects (07/09/25) Effective June 10, 2020, the content of
      this section has moved from Section 8202.3(b). Fidelity or employee dishonesty
      insurance is required for Condominium Projects and Cooperative Projects, except
      the following: ■ Condominium Projects reviewed under the streamlined project
      review type in Section 5701.4 ■ Condominium Projects and Condominium Unit Mortgages
      that meet the requirements in Section 5701.7 and are delivered as Exempt From
      Review ■ Cooperative Share Loans that meet the requirements in Section 5705.7
      and are delivered as Exempt From Review ■ Freddie Mac Enhanced Relief Refinance®
      Mortgages ■ Condominium or Cooperative Projects consisting of 20 units or less
      ■ Condominium or Cooperative Projects where the calculated amount of required
      coverage is less than or equal to $5,000 (based on the coverage requirement
      below) Freddie Mac requires all condominium homeowners associations or Cooperative
      Corporations to obtain and maintain fidelity or employee dishonesty insurance
      that meets the terms and conditions of coverage detailed in this section. In
      States that require condominium homeowners Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 4703 As of 05/06/26 Page 4703-32 associations or Cooperative Corporations
      to obtain and maintain fidelity or employee dishonesty insurance on terms or
      conditions different from Freddie Mac’s, Freddie Mac will deem compliance with
      the State’s requirements to be in compliance with Freddie Mac’s requirements.
      The condominium homeowners association or Cooperative Corporation must maintain
      fidelity or employee dishonesty insurance covering losses resulting from dishonest
      or fraudulent acts committed by directors, managers, trustees, employees or
      volunteers who manage the funds collected and held or administered for the condominium
      homeowners association or Cooperative Corporation. A professional management
      firm must be insured to the same extent as an association or corporation that
      manages its own operation. The management firm must submit evidence of such
      coverage or must be insured under the condominium homeowners association’s or
      Cooperative Corporation’s policy. Fidelity or employee dishonesty insurance
      coverage must have all of the following characteristics: ■ The policy must name
      the condominium homeowners association or Cooperative Corporation as the insured,
      and premiums must be paid as a common expense by the association or corporation.
      ■ The coverage must equal no less than the maximum amount of funds in the custody
      of the condominium homeowners association, Cooperative Corporation or the management
      firm at any one time. A lower coverage limit is acceptable if the Project Documents
      require the condominium homeowners association or Cooperative Corporation and
      any management firm to adhere to certain financial controls. However, in such
      case, the coverage limit must at least equal the sum of three months of assessments
      or Maintenance Fees on all units in the Condominium Project or Cooperative Project.
      Freddie Mac will accept reduced fidelity or employee dishonesty insurance coverage
      based on greater financial controls if such controls include at least one of
      the following provisions: ■ The condominium homeowners association, Cooperative
      Corporation or management firm maintains separate accounts for the operating
      budget and the reserve fund. The depository institution in which funds are deposited
      sends copies of the monthly account statements directly to the association or
      corporation. ■ Separate records and accounts are maintained for each condominium
      homeowners association, Cooperative Corporation or other community association
      using the management firm’s services. The management firm does not have the
      authority to draw checks on or to transfer funds from the reserve fund of the
      condominium homeowners association or Cooperative Corporation. ■ Two or more
      members of the board of directors must sign any checks drawn on the reserve
      fund Freddie Mac Single-Family Seller/Servicer Guide Chapter 4703 As of 05/06/26
      Page 4703-33 4703.5: Fidelity or employee dishonesty insurance for Condominium
      Projects and Cooperative Projects (Future effective date 08/03/26) Effective
      for Mortgages with Application Received Dates on or after August 3, 2026. Fidelity
      or employee dishonesty insurance is required for Condominium Projects and Cooperative
      Projects, except the following: ■ Condominium Projects and Condominium Unit
      Mortgages that meet the requirements in Section 5701.7 and are delivered as
      Exempt From Review ■ Cooperative Share Loans that meet the requirements in Section
      5705.7 and are delivered as Exempt From Review ■ Freddie Mac Enhanced Relief
      Refinance® Mortgages ■ Condominium or Cooperative Projects consisting of 20
      units or less ■ Condominium or Cooperative Projects where the calculated amount
      of required coverage is less than or equal to $5,000 (based on the coverage
      requirement below) Freddie Mac requires all condominium homeowners associations
      or Cooperative Corporations to obtain and maintain fidelity or employee dishonesty
      insurance that meets the terms and conditions of coverage detailed in this section.
      In States that require condominium homeowners associations or Cooperative Corporations
      to obtain and maintain fidelity or employee dishonesty insurance on terms or
      conditions different from Freddie Mac’s, Freddie Mac will deem compliance with
      the State’s requirements to be in compliance with Freddie Mac’s requirements.
      The condominium homeowners association or Cooperative Corporation must maintain
      fidelity or employee dishonesty insurance covering losses resulting from dishonest
      or fraudulent acts committed by directors, managers, trustees, employees or
      volunteers who manage the funds collected and held or administered for the condominium
      homeowners association or Cooperative Corporation. A professional management
      firm must be insured to the same extent as an association or corporation that
      manages its own operation. The management firm must submit evidence of such
      coverage or must be insured under the condominium homeowners association’s or
      Cooperative Corporation’s policy. Fidelity or employee dishonesty insurance
      coverage must have all of the following characteristics: ■ The policy must name
      the condominium homeowners association or Cooperative Corporation as the insured,
      and premiums must be paid as a common expense by the association or corporation.
      Freddie Mac Single-Family Seller/Servicer Guide Chapter 4703 As of 05/06/26
      Page 4703-34 ■ The coverage must equal no less than the maximum amount of funds
      in the custody of the condominium homeowners association, Cooperative Corporation
      or the management firm at any one time. A lower coverage limit is acceptable
      if the Project Documents require the condominium homeowners association or Cooperative
      Corporation and any management firm to adhere to certain financial controls.
      However, in such case, the coverage limit must at least equal the sum of three
      months of assessments or Maintenance Fees on all units in the Condominium Project
      or Cooperative Project. Freddie Mac will accept reduced fidelity or employee
      dishonesty insurance coverage based on greater financial controls if such controls
      include at least one of the following provisions: ■ The condominium homeowners
      association, Cooperative Corporation or management firm maintains separate accounts
      for the operating budget and the reserve fund. The depository institution in
      which funds are deposited sends copies of the monthly account statements directly
      to the association or corporation. ■ Separate records and accounts are maintained
      for each condominium homeowners association, Cooperative Corporation or other
      community association using the management firm’s services. The management firm
      does not have the authority to draw checks on or to transfer funds from the
      reserve fund of the condominium homeowners association or Cooperative Corporation.
      ■ Two or more members of the board of directors must sign any checks drawn on
      the reserve fund'
  judgment: false
