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1.5.3.7 Distribution of Insurance Proceeds After Disaster

Significant Law Change

Freddie Mac has clear rules for the distribution of insurance proceeds after a disaster:

  • ● For borrowers who were fewer than thirty-one days’ delinquent at the time of the Eligible Disaster, servicers are required to release up to $40,000 of insurance funds in accordance with the requirements of the Freddie Mac Single-Family Seller/Servicer Guide section 8202.11 to help expedite property repairs.
  • ● For borrowers who were thirty-one or more days’ delinquent at the time of the Eligible Disaster, servicers are required to release insurance funds in accordance with the requirements of section 8202.11.
  • ● Insurance loss settlements that are intended for contents losses or off-residence living expenses must be released to the borrower without delay.151

Footnotes