How to Add or Change a Mortgagee Clause

When a mortgagee needs to be added or changed

Situation	Who usually initiates	Timing pressure
Home purchase with a new loan	Borrower, loan officer, or processor contacts the agent	Must be done before closing
Refinance (new lender or new loan)	Borrower or new lender	Before closing; remove old lender after payoff
Second mortgage or HELOC	Borrower or junior lender	Before the junior loan closes
Servicing transfer	Old or new servicer	Soon after the transfer effective date
Loan paid off	Borrower	After payoff is confirmed

Step by step: adding a mortgagee to a homeowners or dwelling policy

1. Get the clause in writing from the lender. Ask for the mortgagee name exactly as it should appear, successor language (ISAOA or the spelled-out phrase), any ATIMA wording, the insurance correspondence address, and the loan number. Loan officers often have this in the closing instructions. Members can also look up the lender on mortgageeclauses.com via search and confirm the listing status: Verified (checked against the lender's or servicer's own primary source, with the date shown) or Pending Verification.
2. Confirm the named insureds. Fannie Mae's Selling Guide (B7-3-08) requires the policy for a one- to four-unit property to name everyone who holds title. If a new co-borrower or spouse is going on title, update the named insured at the same time.
3. Confirm position. On a first mortgage, the lender is the first mortgagee. A junior lien goes in the second mortgagee position. Under the ISO homeowners form, payment follows the order of precedence of the mortgages, so position matters.
4. Submit the change as a policy change through the agency management system or carrier portal, following the carrier's procedures. The mortgagee is usually shown on the declarations page; carriers that use a separate endorsement will issue it.
5. Set billing. If the premium will be paid from escrow, set the bill to go to the mortgagee. Fannie Mae requires that the insurer be instructed to send all correspondence, policies, and bills to the servicer.
6. Issue evidence. Send an updated declarations page or evidence of property insurance to the lender, along with a paid receipt or invoice if the lender requires one. See proof of insurance and EOI.
7. Keep a record of the date sent, recipient, and delivery method. It helps if the servicer later says it has no proof of coverage.

Rental properties on dwelling fire forms follow the same steps. ISO dwelling forms contain a mortgage clause condition that mirrors the homeowners form.

Commercial property policies

Commercial loans carry more detailed insurance covenants, so read the lender's insurance requirements, not just the clause.

• Mortgageholder on the declarations. The ISO Building and Personal Property Coverage Form (CP 00 10) includes a "Mortgageholders" condition. A mortgageholder shown in the declarations is paid for covered building loss in order of precedence, keeps its right to payment even if it has started foreclosure, and can still be paid when the insured's claim is denied because of the insured's acts, provided it meets its own conditions.
• Loss payable provisions. Lenders financing business personal property or equipment often require the ISO Loss Payable Provisions endorsement (CP 12 18), which offers a Loss Payable Clause, a Lender's Loss Payable Clause, a Contract of Sale Clause, and a Building Owner Loss Payable Clause. The lender's instructions should say which applies.
• Liability coverage. If the lender also wants protection on the general liability policy, that is an additional insured endorsement, not a mortgagee entry. The ISO endorsement commonly used is CG 20 18, Additional Insured – Mortgagee, Assignee or Receiver.
• Evidence. Commercial lenders usually expect an ACORD 28 Evidence of Commercial Property Insurance, often with copies of the endorsements.

The differences between these roles are covered in loss payee vs. mortgagee vs. additional insured.

Timing at closing

1. As soon as the borrower has a contract or rate lock, the agent should get the lender's clause and quote the policy with the correct property address and effective date.
2. Bind coverage effective on or before the closing or funding date. The lender or title company will check that the effective date does not leave a gap.
3. Send evidence several business days before closing to the loan processor or the address the lender designates. Include the mortgagee clause, coverage amounts, deductibles, policy period, and premium.
4. Coordinate premium payment. If the first year's premium is being paid at closing, give the settlement agent an invoice showing the amount and payee. Lenders' closing conditions specify whether the premium must be paid in full.
5. After closing, watch for a servicing transfer. Many loans are sold or transferred shortly after closing. Regulation X (12 CFR 1024.33) allows the transfer notice to be provided at settlement or, generally, at least 15 days before the transfer by the old servicer and within 15 days after by the new one.

Refinances

A refinance is a new loan, even when the lender stays the same.

• Add the new lender's clause before closing, with the new loan number. If the same company is refinancing, still confirm the clause, because loans can be serviced under a different name or address.
• Do not remove the old lender until the payoff is confirmed. Removing it early leaves the lender whose lien is still recorded without notice rights. After payoff, the borrower or new lender can request removal.
• Check escrow. A renewal bill sent to the old servicer after payoff can lead to a missed payment.

Servicing transfers

When servicing moves, the existing clause with ISAOA keeps the designation effective, but the insurer still needs the new name and address. Fannie Mae's Servicing Guide (F-1-11) requires the transferor or transferee servicer to notify property and flood insurers to substitute the transferee servicer in the mortgagee clause and to change the premium billing address (unless the borrower pays directly). In practice:

• The new servicer often sends the insurer a mortgagee change request directly. Process it like any other change and confirm the request came from the servicer of record. The Regulation X transfer notice the borrower received names the new servicer and its contact information.
• If the borrower brings you the transfer notice first, use it to verify the new servicer, then obtain the clause from that servicer.

For the agency-by-agency rules on naming, see mortgagee clause requirements by state.

Common mistakes

• Leaving the old lender on after a refinance payoff, or removing it before payoff.
• Overwriting the first mortgagee when adding a HELOC lender. The junior lien goes in the second position.
• Using the payment address from a statement. Insurance correspondence addresses are usually separate.
• Not reissuing evidence after the change. The servicer's tracking system will not know about the change until it receives proof.
• Accepting a change request without checking the source. Verify the requester is the servicer of record before redirecting notices and checks.

Frequently asked questions

How long does it take to add a mortgagee to a policy?

It depends on the carrier. A mortgagee change is usually a routine policy change, and updated evidence can often be issued once it is processed. Build in time before closing in case other changes made at the same time need underwriting review.

Does adding a mortgagee change the premium?

Adding or changing a mortgagee by itself usually does not change the coverage being priced, but carriers set their own rules. Changes made at the same time, such as new named insureds, a new address, or different coverage limits, can affect premium.

Who can request a mortgagee change?

The named insured can, and so can the servicer of record for its own entry, according to carrier procedures. Agents should confirm that a servicer request comes from the actual servicer, for example by checking it against the borrower's servicing transfer notice.

What happens if the mortgagee is wrong at closing?

The lender may delay closing until corrected evidence arrives. After closing, fix it promptly, or the servicer may miss renewal bills and cancellation notices and start asking the borrower for proof of coverage.

Should I remove the old lender after a refinance?

Yes, but only after the old loan has been paid off. Until then, the old lender still has a recorded lien and an insurable interest.

Related resources

Start with what a mortgagee clause is and ISAOA and ATIMA if the wording is unfamiliar, browse state pages, or check the glossary. Agencies can compare plans and pricing or see how insurance agents use the lookup.

Sources

• Fannie Mae Selling Guide B7-3-08, Mortgagee Clause, Named Insured, and Notice of Cancellation Requirements: https://selling-guide.fanniemae.com/sel/b7-3-08/mortgagee-clause-named-insured-and-notice-cancellation-requirements
• Fannie Mae Servicing Guide F-1-11, Post-Delivery Servicing Transfers: https://servicing-guide.fanniemae.com/svc/f-1-11/post-delivery-servicing-transfers
• Freddie Mac Single-Family Seller/Servicer Guide Section 4703.6, Mortgage clause: https://guide.freddiemac.com/app/guide/section/4703.6
• CFPB, Regulation X, 12 CFR 1024.33, Mortgage servicing transfers: https://www.consumerfinance.gov/rules-policy/regulations/1024/33/
• ISO Homeowners 3 – Special Form HO 00 03 03 22, Section I Conditions, as reproduced by FC&S: https://www.propertycasualty360.com/fcs/2022/03/14/homeowners-ho-00-03-03-22-revisions-section-i-conditions-part-7-analysis/
• ISO dwelling property forms, Conditions, FC&S: https://www.propertycasualty360.com/fcs/2018/07/09/dwelling-property-forms-conditions/
• ISO CP 00 10 10 12, Building and Personal Property Coverage Form: https://www.propertyinsurancecoveragelaw.com/wp-content/uploads/2023/12/CP-00-10-10-12-Building-and-Personal-Property-Coverage-Form.pdf
• ISO CP 12 18 06 07, Loss Payable Provisions: https://assets.touchpointmarkets.com/72/2a/24c02656468bbf4bd0644776b3d9/cp-12-18-06-07-loss-payable-provisions.pdf
• ISO CG 20 18 12 19, Additional Insured – Mortgagee, Assignee or Receiver, FC&S analysis: https://www.propertycasualty360.com/fcs/2020/03/10/cg-20-18-12-19-additional-insured-mortgagee-assignee-or-receiver/
• ACORD 28, Evidence of Commercial Property Insurance (2016/03), New York DFS approved form: https://www.dfs.ny.gov/system/files/documents/2021/02/acord_28_2016-03.pdf