Mortgagee Clause Rules: Fannie, Freddie, FHA and VA

Fannie Mae and Freddie Mac require a standard mortgagee clause that names the lender or servicer with successor language, never MERS, and usually not the agency itself. FHA requires the lender to be named as loss payee on hazard policies it requires. VA requires customary hazard coverage, with loss proceeds applied to restoration or the loan balance.

Many people think the wording of a mortgagee clause comes from state law or the insurer. For most residential loans, it comes from the investor or insurer behind the loan. This guide sticks to what each official guide or regulation actually says, quoted or closely paraphrased, with links so you can check the current version yourself. Guides change, so check the live text before relying on a specific requirement.

Fannie Mae: what the Selling Guide requires

Fannie Mae's rules are in Selling Guide B7-3-08. They apply to individual property and flood policies kept by the borrower, not to master policies.

Who is named

• Fannie Mae is generally not named. It "must not be named in the mortgagee clause unless the coverage or its interest would be impaired." If it is named, the clause must read "Fannie Mae, in care of (insert servicer's name and address here)."
• Otherwise, name the lender, "followed by the phrase 'its successors and/or assigns,' and mailing address." If the lender isn't the servicer, name the servicer the same way.
• The insurer must be told to send all correspondence, policies, and bills to the servicer, or to both the first and second mortgage servicers.
• No MERS. If MERS is the original mortgagee of record, it "must not be named as mortgagee or loss payee." Name the servicer instead.

Type of clause

For one- to four-unit properties, the policy must include a "standard" or "union" mortgagee clause (without contribution) in the form customarily used where the property is located. "A loss payable clause in lieu of a mortgagee clause is not acceptable."

Named insured and cancellation notice

• The policy must name all persons holding title as named insureds.
• The policy must provide written notice to the named insured and mortgagee(s) before the insurer can cancel.

Evidence and transfers

B7-3-07 lets lenders accept a certificate of insurance instead of the full policy if it contains everything needed to confirm compliance and is signed by the insurer. After a servicing transfer, Servicing Guide F-1-11 requires the servicer to ask insurers to substitute the new servicer in the mortgagee clause.

Freddie Mac: what Section 4703.6 requires

Freddie Mac's single-family rule is Seller/Servicer Guide Section 4703.6. It says:

• Policies for 1- to 4-unit properties "must have the insurance industry's standard mortgage clause," and the clause must provide that the insurer "will notify the named mortgagee at least 10 days before cancelation."
• If Freddie Mac owns the loan, "(name of Seller/Servicer), its successors and assigns" should be named as mortgagee instead of Federal Home Loan Mortgage Corporation.
• In deed-of-trust jurisdictions, the mortgagee should be designated "(name of Seller/Servicer), its successors and assigns, beneficiary."
• If MERS is the original mortgagee of record, MERS may not be named as loss payee under any circumstances.

Fannie Mae says "successors and/or assigns" and Freddie Mac says "successors and assigns." Both convey the same idea; use the wording the lender gives you. See ISAOA/ATIMA explained.

FHA: what HUD Handbook 4000.1 requires

FHA's servicing rule is in Handbook 4000.1, Section III.A.1.h, "Insurance Coverage Administration." It was most recently revised effective 02/02/2026 by Mortgagee Letter 2025-06. If the mortgagee requires hazard insurance, it must:

• "allow Borrowers to choose their own hazard insurance company;"
• "be named as a 'Loss Payee' on the hazard insurance policy;" and
• "escrow sufficient funds for the payment of a renewal premium."

The mortgagee also "must not require more coverage than is necessary to protect its investment." It must promptly release proceeds meant for the borrower's personal property and temporary housing.

HUD uses the term "Loss Payee" and does not publish a model clause. FHA lenders give their own clause wording in closing instructions, and many use ISAOA/ATIMA language. Don't assume an FHA lender wants a simple loss payable endorsement. Use the clause the lender specifies.

VA: what 38 CFR 36.4329 requires

VA's rule is short. Under 38 CFR 36.4329, the holder "shall require insurance policies to be procured and maintained in an amount sufficient to protect the security against the risks or hazards to which it may be subjected to the extent customary in the locality." Insured-loss proceeds "shall be applied to restoration of the security or to the loan balance." Flood insurance is required in FEMA special flood hazard areas, for at least the lesser of the outstanding principal balance or the NFIP maximum.

VA does not prescribe clause wording. As with FHA, use the lender's or servicer's clause.

Side-by-side comparison

What this means for each role

• Loan officers and processors: Put the exact clause, including successor language and insurance address, in the borrower's and agent's hands early.
• Insurance agents and CSRs: Match the lender's clause character for character, name every titleholder, and never substitute MERS or the agency.
• Title, escrow, and closing attorneys: Compare the declarations page or EOI to the lender's closing instructions before funding. See proof of insurance and EOI.

How MortgageeClauses.com helps

The guides tell you *who* to name. You still need that lender's or servicer's actual clause and insurance address. Search MortgageeClauses.com by lender to see the clause wording, ISAOA/ATIMA format, and insurance mailing address. Each record is marked Verified against a primary source or Pending Verification, and listings include servicer contacts and verification portal links. Loan teams can start a 30-day trial with no card, or compare Team and Agency plans.

Key takeaways

• Fannie Mae: standard/union clause without contribution, lender or servicer "its successors and/or assigns," no MERS, all titleholders named.
• Freddie Mac: industry standard mortgage clause, 10-day cancellation notice, name the Seller/Servicer rather than Freddie Mac, "beneficiary" in deed-of-trust states.
• FHA: the mortgagee is named as loss payee, the borrower chooses the insurer, and renewals are escrowed. No model clause is published.
• VA: customary hazard coverage, proceeds go to restoration or the loan balance, flood coverage in SFHAs.
• Always use the lender's own clause. Start with what a mortgagee clause is.