Fannie Mae Releases Standard Deed-in-Lieu of Foreclosure Requirements, Announces Other Servicing Policies

Fannie Mae Mortgage Servicing Servicing Guide

On November 28, Fannie Mae introduced new requirements for Fannie Mae Mortgage Release, Fannie Mae’s deed-in-lieu of foreclosure process. Servicing Guide Announcement SVC-2012-25 announced three exit options for borrowers under Mortgage Release: (i) immediate move, (ii) three-month transition with no rent payment, and (iii) 12-month lease with market rent payment. The new policy applies to mortgage loans evaluated for a Mortgage Release on or after March 1, 2013, though Fannie Mae encourages servicers to implement the policy changes earlier. The Announcement details Mortgage Release requirements, including borrower eligibility, documentation requirements, servicer duties and responsibilities, and mortgage insurer approval. The new requirements were developed in response to the FHFA’s directive to Fannie Mae and Freddie Mac to simplify and streamline the Mortgage Release processes, and they parallel those announced last week by Freddie Mac. SVC-2012-25 also updates certain short sale requirements originally addressed in SVC-2012-19, which are to be implemented immediately.

Also on November 28, Fannie Mae issued Servicing Guide Announcement SVC-2012-24, which, effective immediately, applies Servicing Guide terms and conditions regarding temporary suspension of foreclosure proceedings to all mortgage loans that have been referred to foreclosure prior to receipt of a complete Borrower Response Package, regardless of the length of the delinquency. The Announcement states that Fannie Mae approval is no longer required to postpone a foreclosure sale for a mortgage loan that is more than 12 months past due (as measured from the last paid installment date). Finally, on November 21, Fannie Mae issued Servicing Guide Announcement SVC-2012-23 to update the maximum foreclosure attorney fees allowed for certain states.