Freddie Mac Single-Family Seller/Servicer Guide §8202.6 — Lender-Placed Insurance (LPI) (07/09/25)
Freddie Mac Guide §8202.6 (Lender-Placed Insurance (LPI)). Gap-fill (verbatim, ID-diff).
Verbatim regulatory text
Verbatim provisions from Freddie Mac Single-Family Seller/Servicer Guide §8202.6 — Lender-Placed Insurance (LPI) (07/09/25) — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
Freddie Mac Guide 8202.6
This section contains information related to: ■ Insurance coverage requirements ■ Defined term for Lender-Place Insurance (LPI) ■ Required deductible for LPI covered dwelling (a) Insurance coverage requirements The Seller/Servicer must require the Borrower to obtain appropriate insurance coverage in accordance with the terms of the Security Instrument, the Guide and applicable law. The Servicer must continuously monitor the Borrower and Mortgage to ensure that adequate coverage has been obtained and remains in force. If the Borrower’s coverage is canceled or in jeopardy of cancelation due to non-payment of premium, the Servicer must attempt to continue coverage by paying the premium on behalf of the Borrower in accordance with applicable law. If the Borrower and the Servicer do not or cannot continue such coverage or if the coverage obtained is canceled or lapses, the Servicer must obtain LPI. The Servicer must adjust the Borrower’s Escrow payments accordingly or bill the Borrower to recover the advance if the Servicer does not maintain an Escrow account for the Borrower. If the Borrower fails to reimburse the Servicer, the Servicer may recommend acceleration to Freddie Mac for the Borrower’s default under the terms of the Security Instrument.
Freddie Mac Guide 8202.6
202-18 If the additional coverage cannot be obtained, the Servicer must immediately make appropriate recommendations to Freddie Mac (see Directory 5). If the Servicer obtains LPI coverage for the Borrower from an LPI carrier in accordance with this section, the following apply: ■ The Servicer or agents, brokers or other entities affiliated with the Servicer may not receive any compensation in the form of commissions or similar incentive-based compensation regardless of its designation as commission, bonus, fees or other type of payment from LPI carriers; and ■ The Servicer may not use its own affiliated entities to insure or reinsure LPI (b) Defined term for LPI For purposes of this section an “entity” is “affiliated” with the Servicer when it is owned or controlled, in whole or in part, by the Servicer, including, but not limited to, a subsidiary of or in a joint venture or partnership with the Servicer. An affiliated entity shall also include any entity that owns or controls, in whole or in part, the Servicer (e.g., the parent company of the Servicer) and any entity that is under common ownership or control with the Servicer (e.g., two subsidiaries of the same parent company). An affiliated entity shall not include a publicly traded company of whose stock the Servicer owns less than 5%. (c) Required deductible for LPI policies The required deductible is based on the dwelling coverage amount provided by the LPI policy. These deductibles are required for all perils except wind, hail and flood, to the extent permissible under applicable State law. Required deductibles for LPI policies are provided in the table below: LPI policy coverage requirements Dwelling coverage Deductible Less than $100,000 $1,000 $100,000 up to and including $250,000 $2,000 Greater than $250,000 $2,500 The Servicer must comply with all applicable law pertaining to administration of LPI, including providing notices to the Borrower and refund of premium for duplicate coverage.
Freddie Mac Guide 8202.6
202-19 The Servicer must, upon request from Freddie Mac, provide a copy of the insurance policy and any and all agreements with any LPI carrier used by the Servicer on Mortgages demonstrating compliance with the above requirements. A Servicer’s failure to comply with the above requirements may result in any of the remedies available to Freddie Mac in Section 3601.1.
Freddie Mac Guide 8202.6
Mortgage insurance terms, warranties and other requirements (07/09/25) This section contains information related to: ■ Mortgage insurance defined terms ■ General warranties and covenants and other requirements ■ Pre-HPA Mortgage that is modified ■ Determination of property securing the Mortgage ■ Other conditions for Borrower-requested cancelation of Borrower-paid mortgage insurance ■ Borrowers impacted by an Eligible Disaster (a) Mortgage insurance defined terms The following terms apply for purposes of this chapter: Defined terms related to the mortgage insurance H HPA The Homeowners Protection Act of 1998, as amended HPA Effective Date July 29, 1999, the first date on which requirements of the HPA applied to any HPA Mortgage HPA Mortgage A 1-unit Primary Residence Mortgage with mortgage insurance originated on or after the HPA Effective Date. For purposes of canceling mortgage insurance in accordance with the requirements of Sections 8203.2 and 8203.4(a), an “HPA Mortgage” also includes any second home Mortgage (as defined in Section 4201.12) with mortgage insurance and any Pre-HPA Mortgage HPA Mortgage Annual Notice A written statement that, pursuant to the HPA, the Seller/Servicer must send annually to a Borrower concerning the Borrower’s HPA Mortgage. The statement informs the Borrower of mortgage insurance cancelation and termination rights pertaining to the Borrower’s HPA Mortgage. The HPA requires different notices, the
Freddie Mac Guide 8202.6
203-2 contents of which depend on whether the HPA Mortgage is a fixed- rate or ARM. N Non-HPA Mortgage Any Home Mortgage with mortgage insurance, originated on or after the HPA Effective Date, that is not an HPA Mortgage. For purposes of canceling mortgage insurance in accordance with the requirements of Section 8203.3, a “Non-HPA Mortgage” also includes any Pre-HPA Mortgage secured by a 2- to 4- unit Mortgaged Premises or 1- to 4-unit Investment Property. P Pre-HPA Mortgage Any Home Mortgage with mortgage insurance originated before the HPA Effective Date Pre-HPA Mortgage Annual Notice A written statement that, pursuant to the HPA, the Seller/Servicer must send annually to a Borrower concerning the Borrower’s Pre- HPA Mortgage. The statement gives instructions to the Borrower on how to contact the Seller/Servicer to determine if and how mortgage insurance may be canceled. (b) General warranties and covenants and other requirements The Seller/Servicer warrants that mortgage insurance has been obtained as required in Section 4701.1 and agrees and covenants that such mortgage insurance will be maintained unless canceled in accordance with the requirements of Section 4701.1 (for purposes of determining the “value” of Mortgaged Premises located in the State of New York), Sections 8203.2 through 8203.4(c) or pursuant to applicable law. Additionally, some of the requirements in Sections 8203.2 and 8203.4 are derived from, and are in addition to, requirements under the HPA. The Seller/Servicer also warrants that the Borrower has been given, and agrees and covenants to provide, all disclosures required by applicable law, including, but not limited to, the HPA, relating to the terms on which the Borrower-paid mortgage insurance may be canceled. Such disclosures may include an initial HPA-related notice given to a Borrower at the Mortgage closing and an HPA Mortgage Annual Notice or Pre-HPA Mortgage Annual Notice, as applicable. (c) Pre-HPA Mortgage that is modified The modification of a Pre-HPA Mortgage (a fixed-rate, adjustable-rate) does not cause the Pre-HPA Mortgage to become an HPA Mortgage or trigger any new obligation under this chapter relating to the Pre-HPA Mortgage.
Freddie Mac Guide 8202.6
203-3 (d) Determination of property securing the Mortgage For mortgage insurance cancelation purposes, the occupancy of the Mortgaged Premises as stated in the Borrower’s Mortgage application must be used to determine whether the Mortgaged Premises is a Primary Residence, a second home (as defined in Section 4201.12) or an Investment Property. (e) Other conditions for Borrower-requested cancelation of Borrower-paid mortgage insurance When a Borrower requests cancelation of Borrower-paid mortgage insurance pursuant to Sections 8203.2 and 8203.3, except as may otherwise be provided in a Purchase Document, the Seller/Servicer must not request or require that a Borrower make a written certification or any other representation concerning the existence or nonexistence of a Second Mortgage or other subordinate lien on the Mortgaged Premises. If a Purchase Document contains a condition relating to such a written certification or representation by a Borrower, the Seller and the Servicer of the Borrower’s Mortgage must provide to the Borrower all disclosures required by applicable law with respect to the condition set forth in the Purchase Document. (f) Borrowers impacted by an Eligible Disaster When a Borrower impacted by an Eligible Disaster that resulted in the Mortgage being subject to a disaster-related forbearance plan pursuant to Chapter 8404 or other Purchase Documents requests to cancel Borrower-paid mortgage insurance post-forbearance and after the Mortgage has been restored to a current status, any Delinquency that was a direct result of the Mortgage being subject to a disaster-related forbearance plan, and, following the disaster- related forbearance, transition to a relief or workout option to cure the Delinquency (e.g., repayment plan or Trial Period Plan) in accordance with Section 8404.1(f) or other Purchase Documents, must be considered an exception to the payment history requirements set forth in Sections 8203.2 and 8203.3.
Freddie Mac Guide 8202.6
Borrower-requested cancelation of Borrower- paid mortgage insurance on an HPA Mortgage (12/17/25) This section contains requirements related to: ■ Borrower-requested cancelation of Borrower-paid mortgage insurance based on the original value ■ Borrower-requested cancelation of Borrower-paid mortgage insurance based on the current value
Freddie Mac Guide 8202.6
203-4 For Borrower-requested cancelation of Borrower-paid mortgage insurance, unless otherwise canceled pursuant to applicable law, the Seller/Servicer must cancel such mortgage insurance when the Borrower and the HPA Mortgage meet the requirements of Section 8203.2(a) or Section 8203.2(b), respectively. In addition to processing and/or responding to Borrowers’ written or verbal requests to cancel mortgage insurance in accordance with this section, the Seller/Servicer also may: ■ Systematically identify all Mortgages that the Seller/Servicer services for Freddie Mac that may be close to, or have reached, the applicable mortgage insurance cancelation point set forth below; and ■ Notify the Borrowers of such Mortgages of next steps, if any, that must be taken to determine if mortgage insurance may be canceled Upon obtaining an eligible Borrower’s verbal and/or written request or affirmation, the Seller/Servicer must cancel the related mortgage insurance upon ascertaining that all applicable conditions have been met. (a) Borrower-requested cancelation of Borrower-paid mortgage insurance based on the original value The table below lists the requirements for Borrower-requested cancelation of Borrower-paid mortgage insurance based on the original value (as “value” is defined in Section 4203.1): Borrower-requested cancelation of Borrower-paid mortgage insurance based on the original value* Cancelation point Based on the original value, the loan-to-value (LTV) ratio must be 80% or less. (Note: As opposed to the conditions set forth in row 1, Cancelation point, of Section 8203.2(b), there is no required minimum period having elapsed since the Origination Date of a Mortgage when determining the cancelation point.) At the option of the Borrower, the numerator of the LTV ratio may be based on: ■ The amortization schedule (irrespective of the Mortgage’s current UPB); or ■ The Mortgage’s current UPB (based on actual payments collected) Note: Regarding the amortization schedule in the cancelation point requirements set forth above, this amortization schedule is the initial amortization schedule for a fixed-rate Mortgage or current amortization schedule following the most recent rate change for an ARM or Step-Rate Mortgage. Evidence of value
Freddie Mac Guide 8202.6
203-5 The Seller/Servicer must warrant that the original value of the Mortgaged Premises, at a minimum, supports the LTV ratio required to cancel mortgage insurance. Payment history The Borrower’s payment history must show: ■ The Mortgage is current ■ There was no payment 30 days or more past due in the preceding 12 months (or since the Origination Date if the Mortgage was originated in the past 12 months); and ■ There was no payment 60 days or more past due in the preceding 24 months (or since the Origination Date if the Mortgage was originated in the past 24 months) Pursuant to Section 8203.1(f) regarding Borrowers impacted by an Eligible Disaster, any Delinquency that is a direct result of the Mortgage being subject to a disaster-related forbearance plan and, following the disaster-related forbearance, transition to a relief or workout option to cure the Delinquency (e.g., repayment plan or Trial Period Plan) in accordance with Section 8404.1(f) or other Purchase Documents, must be considered an exception to the payment history requirements set forth above. Note: The reference to a “preceding” period in the payment history requirements set forth above means the specified time period that immediately preceded the later of: (i) the date on which the required LTV ratio was reached or (ii) the date on which the Borrower submits the request to cancel mortgage insurance. *”Value” is defined in Section 4203.1. (b) Borrower-requested cancelation of Borrower-paid mortgage insurance based on the current value The table below lists the requirements for Borrower-requested cancelation of Borrower-paid mortgage insurance based on the current value: Borrower-requested cancelation of Borrower-paid mortgage insurance based on the current value* Cancelation point Based on the Mortgage’s current UPB and the current value, the LTV ratio must be: ■ 75% or less if the Mortgage is seasoned between 2 and 5 years ■ 80% or less if the Mortgage is seasoned greater than 5 years The minimum two-year seasoning requirement is waived if the Servicer determines the increased market value of the Mortgaged Premises since the Origination Date of the Mortgage is due to substantial improvements; the LTV ratio must be 80% or less.
Freddie Mac Guide 8202.6
203-6 Regarding canceling mortgage insurance because of substantial improvements to the Mortgaged Premises, the following conditions must be met: ■ The market value of the Mortgaged Premises must be calculated using the current market value estimate in a BPO or an appraisal that is ordered and obtained in accordance with row 2 of this table, Evidence of value, and prepared after the substantial improvements have been completed ■ The substantial improvements must conform to local zoning and building codes; and ■ The BPO or appraisal must state the specific nature, extent and cost of the improvements made and the effect of the improvements on the current estimated market value Note: The reference to “substantial improvements” in the cancelation point requirements set forth above means that the improvements, made since the Origination Date, were any type of renovation(s) that substantially extended the useful life of the Mortgaged Premises. Examples of “substantial improvements” include, but are not limited to: ■ Significant structural alterations (including addition of square footage) ■ Construction requiring permits ■ Adding new components/appliances that previously didn’t exist (e.g., adding a bathtub, hardwood flooring, central air conditioning) ■ Replacing components/appliances with energy-efficient versions Repairs made to keep the Mortgaged Premises maintained and fully functional (e.g., replacing roofing/flooring/appliances with same materials) are not considered “substantial improvements.” Evidence of value At the Borrower’s expense, and performed no later than 120 days after the date on which the Borrower submits a request to cancel mortgage insurance, the Seller/Servicer must verify the current value by one of the following methods: ■ A new BPO ordered and obtained through BPOdirect®, unless applicable law requires that an appraisal be used or the Seller/Servicer determines that an appraisal is in the Borrower’s best interest (e.g., at the option of the Borrower). The BPO must be an interior and exterior BPO. (Refer to Sections 2406.1 and 9202.4(b) for details regarding Freddie Mac’s process to obtain a property value.) ■ If applicable law requires that an appraisal be used or the Seller/Servicer determines that an appraisal is in the Borrower’s best interest, a new appraisal with an interior and exterior inspection. The Seller/Servicer may order and obtain the appraisal either directly from Freddie Mac through BPOdirect or from an appraiser of its choice. If a Seller/Servicer does not obtain the appraisal directly from Freddie Mac, then the