Fannie Mae Lender Letter LL 2010 14
November 30th, 2010
Fannie Mae issued Lender Letter LL-2010-14 titled, State Farm Florida Insurance.
State Farm Florida Insurance
Introduction
As noted in both the Selling Guide (B7-3-02, Hazard Insurance Policy Requirements) and the Servicing Guide (Part II, Section 202.01: Rated Insurance Underwriters), the hazard insurance policy for a property securing any first mortgage must be written by a carrier that meets specific rating requirements. For example, carriers rated by the A.M. Best Company, Inc. must have a rating of “B” or better.
On August 3, 2010, A.M. Best downgraded State Farm Florida Insurance Company’s financial strength rating to “B-” from “B”. Based upon discussions with State Farm Florida Insurance Company’s parent, State Farm Mutual Automobile Insurance Company, Fannie Mae will continue to accept hazard insurance coverage from State Farm Florida Insurance Company on properties securing mortgage loans owned or securitized by Fannie Mae, retroactive to August 3, 2010.
Fannie Mae reserves the right to withdraw this exception at any time. Fannie Mae will continue to monitor the situation and provide additional instructions to sellers and servicers as circumstances warrant.
As a reminder, this exception is not required for those servicers covered by a mortgage impairment (or mortgage interest) insurance policy. As noted in the Servicing Guide, Part II, Section 202.03: Mortgage Impairment Coverage, Fannie Mae does not require a servicer covered by a mortgage impairment (or mortgagee interest) insurance policy to confirm that the borrower's hazard insurance coverage is with a firm that meets the rating requirements. Instead, the servicer may rely on its impairment policy as a type of reinsurance arrangement. However, the issuer of the mortgage impairment (or mortgagee interest) policy must meet either the A. M. Best’s Financial Strength Rating or Standard and Poor's Insurer Financial Strength Rating specified in Section 202.01.
To view the online Lender Letter, please click here
About Safeguard
Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, Ohio and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees and a handful of contractors performing services in the Midwest, to a national company with over 800 employees. Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.