Loan impact
Summarized from the announcement · needs reviewApplies to: Conventional conforming loans secured by one- to four-unit dwellings or residential project developments.
- Addressed to
- Pennymac correspondent sellersFrom the publisher, not quoted from the text
- Investor
- PennymacFrom the publisher, not quoted from the text
- Programs
- Conventional
- Affected areas
- Condo projects; Eligibility
- Affected documents
- Hazard insurance policy; Master property insurance policy; Individual unit insurance policy (HO-6)
- Exceptions
- Government-insured mortgages; Non-agency jumbo and Non-QM loan programs
- Applicability confidence
- Needs review: some rows could not be matched to a quote from the source
Summary by AWACS. Pennymac Correspondent's guide is proprietary, so AWACS does not reproduce its text. Read the official announcement ↗ (opens in a new tab)
What changed
Summarized from the announcement| Requirement | Previously | Now |
|---|---|---|
| Roof coverage standard on one- to four-unit residential propertiesClarified | Not stated | Roofs must be insured, though replacement cost valuation is no longer required. |
| Replacement cost verification and minimum coverage calculation for one- to four-unit homesClarified | Not stated | RCV verification requirements and the minimum coverage formula based on loan balance and eighty percent RCV are rescinded. |
| Master property policy coverage sufficiency and roof valuation in project developmentsClarified | Not stated | Master policies must cover full project replacement cost with an exception permitting actual cash value for roofs and certain personal property. |
| Inflation guard endorsement on project master property policiesClarified | Not stated | The mandate to carry inflation guard protection on master hazard policies is eliminated. |
| HO-6 unit owner property insurance maximum deductible thresholdClarified | Not stated | The allowable deductible is now the greater of five percent of the coverage limit or twenty-five hundred dollars. |
| Named storm coverage under windstorm property insuranceClarified | Not stated | Windstorm insurance coverage must encompass storms named or numbered by federal meteorological agencies. |
What to do
AWACS interpretation · not source languageWhat to review: Review the updated property insurance flexibilities, including the elimination of replacement cost verification calculations for one- to four-unit properties, updated roof valuation terms, and revised master policy and HO-6 deductible standards.
QC implications
- Sample conventional loan property insurance policies to verify that windstorm coverage includes storms named or numbered by federal meteorological agencies.
- Verify that HO-6 insurance policies do not exceed a maximum deductible of the greater of five percent of the coverage limit or twenty-five hundred dollars.
- Review project developments to ensure master property policies maintain full replacement cost coverage or meet the actual cash value exception for roofs and eligible personal property.
Source and record
Version 1 · archivedChecks
Source verified: Passed
The document ID, link and publication date match the official source.
Quotes match the source: Passed, adjusted automatically
Every quoted passage appears word for word in the official document.
- A detail the source does not support was removed or adjusted
Requirements backed by the source: Passed, adjusted automatically
Anything marked required is backed by the requirement language and dates in the source.
- A detail the source does not support was removed or adjusted
In scope: Passed
The document is about residential mortgage lending.
Format and labels: Passed
The record follows the AWACS format and uses its standard labels.
Source
- Correspondent Announcement 26-42 (official) ↗ (opens in a new tab)
- Archived copy, SHA-256 c7ed565b07ea…
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