Fannie Mae updates foreclosure time frames and compensatory fee requirements

Federal Issues Fannie Mae Servicing Guide Foreclosure Mortgages

On December 19, Fannie Mae issued SVC 2018-10, which describes policy changes to foreclosure time frames and compensatory fee requirements. Specifically, Fannie Mae has revised the maximum number of allowable days within which routine foreclosure proceedings are to be completed in twenty jurisdictions, with some increasing and some decreasing (a complete list available here). Fannie Mae is also replacing the monthly compensatory fee process with a process that focuses on identifying and resolving root causes of the failure to comply with foreclosure time frames. Under the new process, compensatory fees will be assessed if, after a chronic compliance issue is identified and a performance improvement plan is instituted, the servicer still does not meet the terms of the performance plan. The announcement includes a compensatory fee calculation chart and notes that fees will be applied based on the unpaid principal balance of the mortgage loan, the applicable pass-through rate, the length of the delay, and any additional costs that are directly attributable to the delay. The policy changes are effective January 1, 2019.