BLOG

Question:  Does an approved seller/servicer need to report a single fidelity bond or errors and omissions loss to Fannie Mae? 

Answer: 
Yes, in some instances.  Fannie Mae requires an approved seller/servicer to report to Fannie Mae within 30 days after discovery of the occurrence of a single fidelity bond or errors and omissions policy loss that is mortgage related and the amount exceeds the lesser of $250,000 or the policy’s deductible, even when no claim will be filed or when Fannie Mae’s interest will not be affected.

In fact, it is a common MORA examination finding that a seller/servicer does not have a process in place to ensure Fannie Mae of such notification within 30 days. The requirements are set forth in A3-5-04 of the Single Family Selling Guide.

In addition, a seller/servicer must report to Fannie Mae within 10 business days of receipt of a notice from the insurer regarding the intended cancellation, reduction, nonrenewal, or restrictive modification of the seller/servicer’s fidelity bond or errors and omissions policy.  The seller/servicer must email Fannie Mae (fidelity_bond_and_errors_and_omissions_claims@fanniemae.com) a copy of the insurer’s notice, describe in detail the reason for the insurer’s action if it is not stated in the notice, and explain the efforts it has made to obtain replacement coverage or to otherwise satisfy Fannie Mae’s insurance requirements.