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Freddie Mac Insurance Requirements Remain Unchanged Despite a Lapse in the National Flood Insurance Program

March 2, 2010 – Although the National Flood Insurance Program’s (NFIP) authority to issue new and renewal policies and increase coverage on existing policies expired on February 28, 2010, Freddie Mac expects Congress to extend the NFIP’s authority very soon.  Our policies on flood insurance remain unchanged.

Despite the lapse in the NFIP’s authority, Freddie Mac’s policies on flood insurance in Chapters 46 and 58 of the Single-Family Seller/Servicer Guide (Guide) remain unchanged, including:

  • Seller/Servicers originating mortgages for sale to Freddie Mac must continue to perform flood zone determinations.
  • Dwellings on mortgaged properties in Special Flood Hazard Areas, and mortgages delivered to us on such properties, must have flood insurance coverage.
  • For Servicers, payments to renew expiring policies must be effected as scheduled when servicing Freddie Mac mortgages.

If a borrower applies for NFIP flood insurance, acceptable evidence pending issuance of a final NFIP policy may include one of the following:

  • A completed and executed NFIP Flood Insurance Application plus a copy of the borrower’s premium check or agent’s paid receipt;
  • A completed and executed NFIP Flood Insurance Application plus the final HUD-1 form reflecting the flood insurance premium collected at closing;
  • A completed and executed NFIP General Change Endorsement Form showing the assignment of the current flood insurance policy by the property seller to the borrower; or
  • An agent-executed NFIP Certification of Proof of Purchase of Flood Insurance.

If a borrower applies for private flood insurance, the insurer’s binder or equivalent of the applicable NFIP form is acceptable pending issuance of a final NFIP policy.  Private flood insurance is not affected by a lapse in the NFIP’s authority. 

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