Freddie Mac Insurance Requirements (Condo Project)

Freddie Mac imposes condominium master-policy requirements that closely parallel Fannie Mae's, because a condo unit backed by a conventional loan is generally sold to one of the two, and both must find the project insurance acceptable for the loan to be deliverable. The Freddie Mac Single-Family Seller/Servicer Guide sets the condo project insurance standards, with the property and casualty insurance requirements in Chapter 8202 and the condominium project eligibility rules in Chapter 5701: property coverage written on a replacement cost basis for the project improvements, commercial general liability of at least one million dollars per occurrence covering the common elements, fidelity or crime coverage for projects of more than twenty units sized to at least three months of aggregate assessments plus reserves, and flood insurance for any building located in a Special Flood Hazard Area. The main structural difference from Fannie is organizational, not substantive: Freddie places its property insurance requirements in Chapter 8202, while Fannie splits the same ground across the Selling Guide, with property and flood in section B7-3, liability in B7-4-01, and fidelity or crime in B7-4-02. The two agencies keep these requirements substantially harmonized, so a policy built to meet one standard usually meets the other, but the two do not word every provision identically and a lender may review to whichever agency will purchase the loan.

For a board, the practical takeaway is that meeting Fannie Mae's master-policy standard almost always satisfies Freddie Mac as well, and the same handful of items drive warrantability under both: replacement cost valuation, a general liability floor of one million dollars per occurrence, a fidelity or crime bond sized to three months of assessments plus reserves on larger projects, and flood coverage wherever a building sits in a Special Flood Hazard Area. Do not assume the two are interchangeable in every detail. When a unit sale stalls at the lender insurance review, ask which agency the loan is destined for, then confirm the specific provision being flagged against that agency's own text rather than assuming the other agency's language controls. The most efficient posture is to build the master program to the stricter reading of both, so a change in the eventual loan purchaser never reopens the insurance question mid-transaction.

The dedicated community-association markets write to the agency standards as a matter of course, so a genuine coverage shortfall against Chapter 8202 is uncommon on a specialty-placed account. The friction is usually documentation: the requirements a lender verifies on a condo project questionnaire have to be evidenced on the certificate and in the policy, and Freddie and Fannie coordinate closely enough that the same evidence typically serves both. Confirm private flood placements are acceptable where a lender expects coverage at least equal to what the National Flood Insurance Program would provide.