Freddie Mac Single-Family Seller/Servicer Guide 4703.5 — Fidelity or employee dishonesty insurance for

Freddie Mac Single-Family Seller/Servicer Guide 4703.5 — Fidelity or employee dishonesty insurance for

Condominium Projects and Cooperative Projects (08/03/26) Effective for Mortgages with Application Received Dates on or after August 3, 2026. Fidelity or employee dishonesty insurance is required for Condominium Projects and Cooperative Projects, except the following: ■ Condominium Projects and Condominium Unit Mortgages that meet the requirements in Section 5701.7 and are delivered as Exempt From Review ■ Cooperative Share Loans that meet the requirements in Section 5705.7 and are delivered as Exempt From Review ■ Freddie Mac Enhanced Relief Refinance® Mortgages ■ Condominium or Cooperative Projects consisting of 20 units or less ■ Condominium or Cooperative Projects where the calculated amount of required coverage is less than or equal to $5,000 (based on the coverage requirement below) Freddie Mac requires all condominium homeowners associations or Cooperative Corporations to obtain and maintain fidelity or employee dishonesty insurance that meets the terms and conditions of coverage detailed in this section. In States that require condominium homeowners associations or Cooperative Corporations to obtain and maintain fidelity or employee dishonesty insurance on terms or conditions different from Freddie Mac’s, Freddie Mac will deem compliance with the State’s requirements to be in compliance with Freddie Mac’s requirements. The condominium homeowners association or Cooperative Corporation must maintain fidelity or employee dishonesty insurance covering losses resulting from dishonest or fraudulent acts committed by directors, managers, trustees, employees or volunteers who manage the funds collected and held or administered for the condominium homeowners association or Cooperative Corporation. A professional management firm must be insured to the same extent as an association or corporation that manages its own operation. The management firm must submit evidence of such coverage or must be insured under the condominium homeowners association’s or Cooperative Corporation’s policy. Fidelity or employee dishonesty insurance coverage must have all of the following characteristics: ■ The policy must name the condominium homeowners association or Cooperative Corporation as the insured, and premiums must be paid as a common expense by the association or corporation. ■ The coverage must equal no less than the maximum amount of funds in the custody of the condominium homeowners association, Cooperative Corporation or the management firm at any one time. A lower coverage limit is acceptable if the Project Documents require the condominium homeowners association or Cooperative Corporation and any management firm to adhere to certain financial controls. However, in such case, the coverage limit must at least equal the sum of three months of assessments or Maintenance Fees on all units in the Condominium Project or Cooperative Project. Freddie Mac will accept reduced fidelity or employee dishonesty insurance coverage based on greater financial controls if such controls include at least one of the following provisions: ■ The condominium homeowners association, Cooperative Corporation or management firm maintains separate accounts for the operating budget and the reserve fund. The depository institution in which funds are deposited sends copies of the monthly account statements directly to the association or corporation. ■ Separate records and accounts are maintained for each condominium homeowners association, Cooperative Corporation or other community association using the management firm’s services. The management firm does not have the authority to draw checks on or to transfer funds from the reserve fund of the condominium homeowners association or Cooperative Corporation. ■ Two or more members of the board of directors must sign any checks drawn on the reserve fund

Source: Freddie Mac Single-Family Seller/Servicer Guide 4703.5 — Fidelity or employee dishonesty insurance for · source URL · snapshot 4c94f67729042dd6