Agency Loss Draft Procedures Align
Fannie Mae and Freddie Mac recently announced the alignment of their insurance loss procedures. This alignment provides a new direction in the release of loss draft proceeds, and the enhanced endorse and release process.
The resulting changes listed below, we believe, will allow for expedient repair to your customers/members property; as well as increase their satisfaction with the overall monitored process.
- Claims are now classified based on the status of the loan (Current or Delinquent) at the time of notification.
- Endorse and Release threshold are raised allowing the release of proceeds up to $20,000 to the borrower on a current loan. (To be released upon receipt of Adjuster’s Worksheet).
- Claims equal to or greater than $20,000 will require a “licensed/insured” contractor to restore or repair the property. Delinquent borrowers may not self-repair.
(Claims relating to asbestos, sink holes, earthquakes, landslides, lead, mold, explosion and bio-hazard cleanup damage will always require a “licensed/insured” contractor)
- Fannie Mae’s criteria has changed reducing the number of claims that need to be reported via their 176 Form.
- Inspections are only required on all claims greater than $10,000.
The attached Agency Loss Draft Procedures Matrix documents the insurance loss process requirements.