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  • Fannie Announces Hazard Insurance Change for Vacant Properties

    Lending

    On March 6, Fannie Mae issued Servicing Guide Announcement SVC-2013-04, which requires servicers to cancel hazard insurance coverage (for both borrower and lender-placed policies) within 14 calendar days after a property appears on the Vacancy Report in HomeTracker. The policy took effect immediately and applies to all loans where the foreclosure sale occurred or will occur on or after October 1, 2012. For properties foreclosed after that date that have hazard insurance coverage still in place, the servicer must cancel the insurance by March 20, 2013. Fannie Mae also reminded servicers that if a policy is cancelled prematurely and damages are found, the servicer will be required to make Fannie Mae whole for any losses or fees relating to the property damages.

    Fannie Mae Mortgage Servicing Servicing Guide

  • Fannie Mae Announces Servicing Policy Changes

    Lending

    On February 22, Fannie Mae issued Servicing Guide Announcement SVC-2013-02, reminding servicers that when they deposit undisbursed insurance loss draft funds into an interest-bearing account, the account must be for the borrower’s benefit and, regardless of the mortgage loan’s delinquency status, the servicer must comply with applicable laws regarding the disbursement of interest earned to the borrower. The announcement also introduced a new form for use when referring a borrower to Fannie Mae for the exit option that allows a three-month transition with no rent payment required, and updated the form to be used when referring a borrower for the exit option that allows up to a twelve-month lease with a market rent payment. On February 27, Fannie Mae issued Servicing Guide Announcement SVC-2013-03, describing servicing policy changes and updates to (i) private flood insurance, (ii) termination of applicable force-placed insurance, and (iii) special remittance type codes. The private flood insurance change follows a related announcement, SEL-2013-02, which, among other things, informed sellers that Fannie Mae must accept flood insurance from private providers as an alternative to National Flood Insurance Program policies. The insurance-related policies are effective immediately, and servicers must report using the new codes for applicable special remittances on or after April 1, 2013.

    Fannie Mae Mortgage Servicing Force-placed Insurance Flood Insurance Servicing Guide

  • Fannie Updates Foreclosure Time Frames for Twelve States

    Lending

    On February 13, Fannie Mae issued Servicing Guide Announcement SCV-2013-01, which increases the maximum number of allowable days within which routine foreclosure proceedings are to be completed in California, Colorado, Hawaii, Massachusetts, North Carolina, Oregon, Pennsylvania, and Rhode Island, effective for foreclosure sales on or after April 1, 2013. Fannie Mae also decreased the maximum number of allowable days for foreclosure proceedings in Alabama, Iowa, Missouri, and Wisconsin. These time frame reductions will be effective for mortgage loans that become delinquent on or after March 1, 2013. In addition, Fannie Mae (i) announced that on or after April 1, 2013, in New Jersey, allowable delay credit will be given for the actual number of days the mortgage loan is reported in a foreclosure status between December 2010 and April 2012, up to a maximum of 180 days, and (ii) added 90 days to the allowable delay for Military Indulgence, effective for foreclosure sales on or after November 1, 2012. Finally, effective for all foreclosure sales on or after July 1, 2013, those foreclosure sales that result in a third-party sale will be included in the foreclosure time frame compensatory fee billing process for foreclosure delays.

    Foreclosure Fannie Mae Servicing Guide

  • Fannie Mae Updates Maximum Allowable Attorney Fees, Provides Standard Short Sale FAQs

    Lending

    On December 13, Fannie Mae issued Servicing Guide Announcement SVC-2012-26 to update the maximum allowable foreclosure attorney fees for mortgage loans, participation pool mortgage loans, and MBS mortgage loans serviced under the special servicing option secured by properties located in Idaho, Montana, New Hampshire, Puerto Rico, U.S. Virgin Islands, and Wyoming. All listed fee revisions are effective as of January 1, 2013. Concurrently, Fannie Mae issued Frequently Asked Questions regarding its standard short sale and deed-in-lieu of foreclosure requirements, which were announced last month in SVC-2012-19.

    Foreclosure Fannie Mae Short Sale Servicing Guide

  • Fannie Mae Updates Servicing Guide to Implement Harmonized Contracts Directive

    Lending

    On December 5, Fannie Mae issued Servicing Guide Announcement SVC-2012-21, which provides numerous Servicing Guide updates to further conform to the FHFA’s directive that Fannie Mae and Freddie Mac align their servicing contracts and policies. The announcement provides new and revised policies regarding (i) metrics for performing and non-performing loans, (ii) servicer violations and remedies, (iii) compensatory fees, (iv) default events constituting a breach of a servicer’s contractual obligations, (v) servicing terminations and transfer of servicing remedies, (vi) response time frames and appeal process for remedies, and (vii) miscellaneous contractual changes.

    Fannie Mae Mortgage Servicing Servicing Guide

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

    Lending

    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.

    Fannie Mae Mortgage Servicing Servicing Guide

  • Fannie Mae and Freddie Mac Announce New Guidelines for Management of Law Firms

    Lending

    On November 9, Fannie Mae and Freddie Mac announced new, coordinated requirements with respect to the management of law firms for default servicing, bankruptcies, and related litigation. As described in Freddie Mac Bulletin 2012-25, effective June 1, 2013, servicers (i) will be permitted to choose their own attorneys, create their own processes for managing foreclosure processing, and maintain direct relationships with their law firms, (ii) will be required to establish procedures to manage and monitor all aspects of the law firm's performance and compliance with applicable requirements, and (iii) upon request, will be required to perform a due diligence review and provide Freddie Mac with the results. Fannie Mae Servicing Guide Announcement SVC-2012-22 similarly details new servicer requirements with regard to the use of outside law firms. Both Fannie Mae and Freddie Mac will accept and respond to servicer recommendations of law firms beginning March 1, 2013, and will begin conducting new firm training in April 2013. Law firms that are currently in the retained attorney network are not exempt from the new selection and retention processes.

    Foreclosure Freddie Mac Fannie Mae Mortgage Servicing Servicing Guide

  • Fannie Mae and Freddie Mac Align Certain Servicing Policies

    Lending

    On October 3, Fannie Mae and Freddie Mac (the Enterprises) issued announcements reflecting their recent effort to comply with an FHFA directive that the Enterprises work together to harmonize certain of their servicing policies and develop a consistent framework for assessing servicer performance. For example, Fannie Mae’s Servicing Guide Announcement SVC-2012-21 and Freddie Mac’s Bulletin 2012-20 include revisions to the Enterprises’ policies and practices regarding performance metrics for assessing servicers’ fulfillment of their duties. The Enterprises also updated servicing policies to harmonize (i) compensatory fee structures, (ii) servicer violations and remedies, and (iii) servicing terminations and transfer of servicing. The effective date of most changes discussed in the announcements is January 1, 2013. However, Fannie Mae announced miscellaneous contractual changes that are effective immediately, including its adoption of New York law as its choice of law provision, and its clarification of certain Servicing Guide sections related to indemnification and electronic records.

    Freddie Mac Fannie Mae Mortgage Servicing FHFA Servicing Guide

  • Fannie Mae, Freddie Mac Update Guidance on Participation in State Hardest Hit Fund Programs

    Lending

    On September 12, Fannie Mae issued Servicing Guide Lender Letter LL-2012-06, which requires servicers to accept funds provided on behalf of a borrower under a state housing finance agency Hardest Hit Fund (HHF) modification assistance program. This includes funds provided in connection with a loan "recast," or re-amortization. Servicers now are permitted to approve a loan recast for a current or delinquent portfolio loan or loan in an MBS pool. Such loan recasts will not be deemed modifications for purposes of determining eligibility for a subsequent modification. With respect to loan modifications involving a change of terms, such as an interest rate reduction or an extension of the term of the loan, servicers may only apply the modification funds in accordance with existing standard or HAMP modification requirements. These changes are effective immediately.

    On September 10, Freddie Mac issued Bulletin 2012-17, which, effective immediately, allows servicers to participate in state housing finance agency HHF modification assistance programs that permit a mortgage to be recast (after applying the state funds to pay arrearages and curtail principal). The bulletin also revises participation requirements for modification assistance programs. In addition, for foreclosure sales conducted on or after November 1, 2012, servicers will now have 450 days for allowable delays due to military indulgence under the Sevicemembers' Civil Relief Act or parallel state laws. Finally, the bulletin announces a technical Servicing Guide change to reflect an increase in the attorney fee limit for foreclosures in Oregon that was implemented earlier this year.

    Freddie Mac Fannie Mae Mortgage Servicing Servicing Guide

  • Fannie Mae Announces Miscellaneous Servicing Policy Changes

    Lending

    On September 5, Fannie Mae issued Servicing Guide Announcement SVC-2012-20, which updates special investor reporting requirements to provide new guidance regarding reporting a foreclosure for a modified mortgage loan with principal forbearance. The Announcement also provides new contact information for servicers to use when a borrower or servicer of a first-lien mortgage requests information relating to a HomeSaver Advance Note.

    Fannie Mae Mortgage Servicing Servicing Guide

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