Guide updates address evolving market while delivering greater consistency and efficiency

Understanding how trends in the commercial insurance market affect Freddie Mac Multifamily’s ability to deliver on our mission is an important priority. Insurance plays a critical role in safeguarding both borrowers and lenders from financial losses when collateral is damaged or destroyed by various covered perils. 

Staying up to date on the commercial insurance market is essential to Freddie Mac’s risk management efforts. In 2023, growing strain in the property insurance market reduced insurers’ capacity to provide borrowers with coverage that met our standards and premiums were increasing 10% to 20% year over year. As a result, borrowers experienced unprecedented challenges obtaining compliant property insurance and looked to us for solutions that met the market’s needs while continuing to mitigate the risk of losses. 

Refining Our Standards

Throughout 2024, we worked with Fannie Mae and U.S. Federal Housing to review our insurance requirements, examine the standards used by other commercial real estate lenders, and identify opportunities to better align our requirements across the GSEs while allowing borrowers flexibility to manage insurance risks and costs. As part of this effort, we held a symposium with leaders from insurance companies, associations, regulators and brokers/agents alongside lender insurance experts. These discussions provided valuable insight into market challenges affecting all stakeholders. 

Building on that feedback, Freddie Mac and Fannie Mae improved and aligned our multifamily insurance requirements following a comprehensive review of the standards. We also delivered updates that addressed insurance market challenges for stakeholders while maintaining risk management practices to preserve agency safety and soundness.

Updates and Impacts

Of the multiple updates we published in the Freddie Mac Multifamily Seller/Servicer Guide throughout 2025, the following were the most impactful for our lenders and borrowers: 

  • simplified our insurer minimum rating requirements from a list of many to just one 
  • reduced our maximum coverage limits for properties with multiple buildings 
  • increased deductibles and added acceptance of aggregate deductible arrangements that have become effective for borrowers to increase risk retentions with sound mitigants 
  • reduced requirement for Named Storm blanket limits covering portfolios of borrower assets 
  • increased allowance for borrowers to maintain general liability coverage with aggregate caps 
  • reduced our maximum umbrella/excess liability limits required from $50 million to $20 million 

The changes promote consistency across insurance standards while giving borrowers increased flexibility to meet requirements. As a result, our borrowers have an easier path to obtain compliant insurance, lender compliance reviews are more streamlined, and there are fewer exceptions to manage. 

We achieved this while maintaining Freddie Mac’s high standards in support of our continued ability to provide liquidity and stability to the multifamily market 

Moving Forward Together

Freddie Mac remains committed to continuing our collaboration with our Optigo lenders and other stakeholders to monitor the commercial insurance market and recommend adjustments as needed. We expect to continue the positive momentum of the reduction in exception requests in the coming months. Through our collective efforts, we are better positioned to mitigate risk, enhance efficiencies and navigate the evolving landscape of the commercial insurance market while maintaining effective risk management positions.