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FNMA Selling Guide Update - Title Insurer Requirements


Q: Has Fannie Mae recently updated its Title Insurer Requirements?

A: Yes. In a June 5, 2019 announcement, Fannie Mae updated section B7-2-02 of the Selling Guide to reflect the following:

A title insurer must be:

  • Duly authorized and licensed, as required, to issue title insurance in the state where the property is located; and

  • Further evaluated in accordance with the lender's procedures for title insurer approval, which may include factors such as:
  • •  an acceptable rating from a rating agency,
    •  financial strength of the title insurer,
    •  adequate reserves,
    •  record related to satisfactory title claim resolution, or
    •  strength of a reinsurance arrangement subject to the guidelines below.

Additionally, for Insurers Covered by Reinsurance:

  • If the lender accepts an insurer based on the strength of a reinsurer, both the primary insurer and the reinsuring company must be licensed, as required, to issue title insurance within the state where the property is located and are in good standing with that state's insurance regulator.

  • Both insurance carriers must execute an Assumption of Liability Endorsement (Form 858) or an equivalent endorsement that provides for 100% reinsurance of the primary insurer's policy and a 90-day written notice of termination of the reinsurance agreement. The alternative endorsement must be attached to the title insurance policy for each individual mortgage.
Lenders can take advantage of this policy change immediately; but must implement the change for title insurer acceptability for loan applications dated on or after September 1, 2019.


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