Freddie Mac Single-Family Seller/Servicer Guide 2101.8 — Mortgagee’s errors and omissions (E&O) insurance coverage

Freddie Mac Single-Family Seller/Servicer Guide 2101.8 — Mortgagee’s errors and omissions (E&O) insurance coverage

Effective 2026-06-08 · Freddie Mac's stamp for this section

(a) Documentation Mortgagee’s errors and omissions (E&O) insurance coverage must be documented on policy forms commonly issued to institutions similar to the Seller/Servicer. The coverage may be provided in policy forms with names that include, but are not limited to, Mortgage Bankers Bond, Mortgage Errors & Omissions, Mortgage Impairment, Mortgagee Interest, Mortgage Holders Liability, Professional Liability or Mortgage Protection. Whichever policy form is relied upon to document the coverage required by Freddie Mac, the Seller/Servicer warrants that the terms of such coverage meet all of the requirements in this section. (b) Scope The coverage must protect the Seller/Servicer against loss resulting from negligence, errors or omissions committed by the Seller/Servicer or any Designated Agent (as defined in Section 2101.7(b)) while performing, at a minimum, the following duties with respect to Mortgages originated and/or sold by the Seller and/or Mortgages or REO serviced by the Servicer: ■ Determining whether the Mortgaged Premises are located in Special Flood Hazard Areas ■ Ensuring that the Mortgaged Premises are insured in accordance with Chapter 4703 ■ Maintaining, where applicable, FHA insurance, VA guaranty, RHS guaranty or mortgage insurance on the Mortgages ■ Complying with applicable reporting requirements of the FHA, VA, RHS or MI, and ■ Ensuring the payment of property taxes and any other mandatory assessments on the Mortgaged Premises or REO E&O insurance coverage must also include the following provisions for the benefit of Freddie Mac, as holder of an insurable interest in the Mortgages and/or REO originated, sold and/or serviced by the Seller/Servicer: ■ Freddie Mac is named as a loss payee on payment drafts the insurer issues for losses that Freddie Mac incurs in connection with acts covered by the insurance ■ Freddie Mac has the right to file a claim directly with the insurer if the Seller/Servicer fails to file a claim for a covered loss incurred by Freddie Mac when reasonably available ■ Bankruptcy or insolvency of the insured or of the insured’s estate will not relieve the insurer of any of its obligations under the policy (c) Limits and deductibles E&O coverage must equal the amount of the Seller/Servicer’s fidelity bond coverage. However, Freddie Mac does not require E&O coverage in excess of: ■ $10 million if the Base (as defined in Section 2101.8(c)) consists only of Home Mortgages ■ $30 million if the Base consists of Home Mortgages and Multifamily Mortgages Freddie Mac will accept E&O policies providing coverage per Mortgage if the insurance limit per Mortgage is no less than the UPB of the largest Mortgage originated and/or sold by the Seller/Servicer, whichever is highest, provided that Seller/Servicer must review the balances of the Mortgages before each premium renewal date to determine whether the above limitation needs to be increased as the result of the origination of higher balance Mortgages during the last coverage period. For policies that provide coverage per Mortgage loan, the maximum deductible amount for each Mortgage loan cannot be more than 5% of the insurer’s liability per Mortgage loan. For policies that provide coverage per aggregate loss, the deductible is determined in accordance with the following table: Base* Maximum deductible Less than $1 billion The greater of $100,000 or 10% of the face amount of the policy Equal to or greater than $1 billion 15% of the face amount of the policy * Base = The highest of total annual Home Mortgage and Multifamily Mortgage origination, sale or Servicing volume, including Home Mortgages and Multifamily Mortgages held in portfolio. The Seller/Servicer must include in its Base the UPB of all Mortgages for which it holds the related Servicing Contract Right, regardless of whether a Servicing Agent has been engaged to perform subservicing on behalf of the Seller/Servicer. A Servicing Agent must only include in its Base the UPB of Mortgages for which it holds the related Servicing Contract Right and need not include the UPB of Mortgages for which the Servicing Agent has been engaged to perform subservicing on behalf of another Seller/Servicer.

Source: Freddie Mac Single-Family Seller/Servicer Guide 2101.8 — Mortgagee’s errors and omissions (E&O) insurance coverage · source URL · snapshot 4c94f67729042dd6