Mortgagee Clause Requirements by State

The honest framing

Searches for "mortgagee clause requirements in [state]" are common, and it is tempting to answer with fifty different lists. That would be misleading. A Fannie Mae loan in Ohio and a Fannie Mae loan in Arizona use the same mortgagee clause rules, because those rules come from the Fannie Mae Selling Guide. What changes from loan to loan is mostly *who the lender or servicer is*, and that is a lender question, not a state question.

States still matter at the edges, and some of those edges are important. This guide separates the two. For the clause itself, see what a mortgagee clause is.

What is national

Conventional loans sold to Fannie Mae or Freddie Mac

• Standard clause required. Fannie Mae's Selling Guide (B7-3-08) requires a "standard" or "union" mortgagee clause (without contribution) on one- to four-unit properties and does not accept a loss payable clause in its place. Freddie Mac's Seller/Servicer Guide (Section 4703.6) requires the insurance industry's standard mortgage clause.
• Who is named. The lender or servicer, followed by successor language ("its successors and/or assigns" for Fannie Mae; "its successors and assigns" for Freddie Mac), and its mailing address. The agencies themselves are not named except in limited circumstances.
• No MERS. Neither agency allows MERS to be named as mortgagee or loss payee.
• Cancellation notice. Fannie Mae requires written notice to the named insured and mortgagee before cancellation; Freddie Mac requires at least 10 days' notice to the named mortgagee.

Government-backed loans

• FHA. HUD Handbook 4000.1 (Section III.A.1.h) says that when a servicer requires hazard insurance, it must allow borrowers to choose their own insurer, be named as loss payee on the hazard policy, and escrow funds for renewal premiums. The handbook does not prescribe a word-for-word clause; lenders supply their own.
• VA. The VA regulation at 38 CFR 36.4329 requires the loan holder to require hazard insurance in an amount sufficient to protect the security "to the extent customary in the locality," and requires insured-loss proceeds to be applied to restoring the property or to the loan balance.
• USDA guaranteed loans. HB-1-3555 (Chapter 16) requires lenders to ensure borrowers continuously maintain hazard insurance until the loan is paid in full, with a policy in force at closing, and points lenders to GSE standards.

Federal servicing rules

Regulation X applies nationwide: force-placed insurance notices and refunds (12 CFR 1024.37), escrow disbursement timing (12 CFR 1024.17(k)), and servicing transfer notices (12 CFR 1024.33).

What varies by state

1. Mortgage vs. deed of trust wording

Some states primarily use deeds of trust rather than mortgages. Freddie Mac's guide notes that in deed-of-trust jurisdictions the mortgagee may be designated as "(name of Seller/Servicer), its successors and assigns, beneficiary." Some lenders add "beneficiary" in those states; others do not. Follow the lender's instruction.

2. "The form customarily used in the area"

Fannie Mae requires the standard mortgagee clause "in the form customarily used in the area in which the property is located." That language acknowledges that policy forms and their mortgage clause wording can differ by market, because insurers file forms state by state. The protections should be equivalent; the exact text may not be identical.

3. Insurance cancellation, nonrenewal, and notice law

Property insurance is regulated by the states, and each state's insurance code sets rules for cancellation and nonrenewal notices to policyholders. Regulation X itself recognizes the overlap in several places:

• Its servicing transfer rule says state laws requiring additional notices to insurance companies or taxing authorities are not preempted (12 CFR 1024.33(d)).
• Its force-placed insurance commentary notes that state law or policy terms may give a borrower extra time to pay a premium; if the insurer accepts payment with no lapse, coverage counts as continuous.
• Charges that are subject to state regulation as the business of insurance are carved out of Regulation X's "bona fide and reasonable" fee limit (12 CFR 1024.37(h)).

4. Certificate of insurance rules

Some states regulate the certificate and evidence forms agents issue. Texas, for example, has a certificate of insurance statute (Texas Insurance Code Chapter 1811) and the Texas Department of Insurance publishes a list of approved certificates, including ACORD 27 and ACORD 28 editions. New York's Department of Financial Services posts approved ACORD forms as well. See proof of insurance and EOI.

5. Property-specific state issues

USDA's handbook notes that policies must state whether a building is on leasehold, "since some state laws have specific insurance requirements pertaining to leasehold interests." Coverage availability and deductible structures, such as separate wind or hurricane deductibles in coastal states, also differ by market and can affect whether a policy meets the lender's requirements, even though the clause itself does not change.

6. State housing finance agencies

State housing finance agencies (HFAs) run first-mortgage and down payment assistance programs, and their program or servicing guides can set their own insurance and mortgagee clause instructions. For example, the Connecticut Housing Finance Authority's operations manual specifies how the agency and the loan servicer must be named on hazard policies for its loans, and separately addresses subordinate assistance loans. When an HFA program is involved, check the HFA's current guide or the servicer's instructions, and expect a first-mortgage clause and a separate entry for any HFA second lien. The National Council of State Housing Agencies (NCSHA) website has a "Find a State Housing Finance Agency" directory.

Using our state pages

Start from the state index and open the page for your state at /states/{state-slug}, for example /states/florida, /states/texas, /states/california, or /states/new-york, for state-level context. Then confirm the clause for the specific lender or servicer on its lender page via search. Each listing is marked Verified (confirmed against the lender's or servicer's own primary source, with the date checked) or Pending Verification.

Common mistakes

• Assuming a state mandates a particular mortgagee wording. For most residential loans, the lender and investor rules control.
• Copying a clause from a colleague "because it's the same state." Two loans in the same county can have different servicers.
• Ignoring the HFA second lien on an assistance loan.
• Altering approved certificate forms in states that regulate them.
• Treating "beneficiary" as optional when the lender has included it, or adding it when the lender has not.

Frequently asked questions

Do mortgagee clause requirements differ by state?

Mostly no. The clause format for most residential loans comes from the lender and investor or insurer guidelines, such as Fannie Mae, Freddie Mac, FHA, VA, and USDA, which apply nationally. States influence related matters such as cancellation notice rules, certificate forms, deed-of-trust terminology, and HFA program requirements.

Does my state require ISAOA or ATIMA?

Successor language such as ISAOA comes from lender and investor requirements, including Fannie Mae and Freddie Mac, not from a typical state statute. ATIMA is included when the lender asks for it. Always use the lender's or servicer's exact wording.

What is different about deed-of-trust states?

In states that use deeds of trust, the lender is technically the beneficiary. Freddie Mac's guide allows the designation "(Seller/Servicer), its successors and assigns, beneficiary" in those jurisdictions. Use it when the lender's instructions do.

Do state housing finance agency loans have their own mortgagee clause?

Often yes. HFAs can set their own naming instructions in program or servicing guides, sometimes naming the agency in care of the servicer, and an HFA down payment assistance loan may need its own subordinate mortgagee entry. Check the HFA's current guide or the servicer's instructions.

Who regulates cancellation notices to the mortgagee?

The policy's mortgage clause sets the insurer's notice obligation to the mortgagee, investor guidelines set minimums the lender expects (Freddie Mac requires at least 10 days), and state insurance law governs cancellation and nonrenewal procedures generally.

Related resources

The abbreviations are covered in ISAOA and ATIMA explained, the mechanics in how to add or change a mortgagee, and role differences in loss payee vs. mortgagee vs. additional insured. Terms are in the glossary; agency plans are on pricing and for insurance agents.

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
• Freddie Mac Single-Family Seller/Servicer Guide Section 4703.6, Mortgage clause: https://guide.freddiemac.com/app/guide/section/4703.6
• HUD Handbook 4000.1, Section III.A.1.h, Insurance Coverage Administration: https://www.hud.gov/sites/default/files/OCHCO/documents/40001-hsgh-Update-17.pdf
• 38 CFR 36.4329, Hazard insurance (VA): https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4329
• USDA Rural Development HB-1-3555, Chapter 16, Closing the Loan and Requesting the Guarantee: https://usdalinc.sc.egov.usda.gov/docs/rd/sfh/3555/ByIndividualChapter/Chapter16_Closing_the_Loan_Requesting_the_Guarantee_RPMB_Publication_track%20changes.pdf
• CFPB, Regulation X, 12 CFR 1024.33, Mortgage servicing transfers: https://www.consumerfinance.gov/rules-policy/regulations/1024/33/
• CFPB, Regulation X, 12 CFR 1024.37, Force-placed insurance: https://www.consumerfinance.gov/rules-policy/regulations/1024/37/
• CFPB, Regulation X, 12 CFR 1024.17, Escrow accounts: https://www.consumerfinance.gov/rules-policy/regulations/1024/17/
• Texas Department of Insurance, Property and Casualty Certificates of Insurance: https://tdi.texas.gov/certificates/
• New York DFS, approved ACORD 28 (2016/03): https://www.dfs.ny.gov/system/files/documents/2021/02/acord_28_2016-03.pdf
• Connecticut Housing Finance Authority Operations Manual, Section 4: https://www.chfa.org/assets/1/6/Operations_Manual_section_4_new_Rev_12.18.24-3.pdf
• National Council of State Housing Agencies: https://www.ncsha.org/