Fannie Mae has announced updates to its Servicing Guide involving new proration requirements to allowable attorney foreclosure fees and determining when foreclosure proceedings should be suspended, among other changes.
According to Servicing Guide Announcement SVC-2016-04 issued by Fannie Mae on Wednesday, the current requirement is for servicers and law firms to charge reasonably prorated allowable foreclosure attorney fees for the services that were actually provided when a foreclosure proceeding is interrupted or not completed.
Fannie Mae said that in order to provide consistency, the Servicing Guide on Prorated Attorney Fees/Reimbursement of Uncollected Fees and Costs has been updated to include new requirements on the prorating of allowable foreclosure fees on mortgage loans backed by Fannie Mae.
Servicers are encouraged to implement the new prorated foreclosure attorney fee requirements for both currently active foreclosure matters and new referrals before September 1, 2016. Fannie Mae is requiring servicers to implement the changes for all matters referred to attorneys for the initiation of foreclosure on or after September 1.
Another change involved setting a maximum allowable reimbursement limit to servicers for the cost of posting the notice of foreclosure sale at the designated public location in California, as required by state law. The updates to Servicing Guide E-5-07, Other Reimbursable Expenses and Servicing Guide F-1-06, Expense Reimbursement reflect a maximum reimbursement amount of $75 and will apply to all foreclosure referrals on or after July 1.
Other changes made include updates to Servicing Guide E-3, 4-01: Suspending Foreclosure Proceedings for Workout Negotiations. The reference to the Post Foreclosure to Referral Solicitation Letter has been removed, and from now on servicers are required to use the foreclosure referral as the consistent point in time for determining when to suspend foreclosure proceedings. While servicers are encouraged to implement the change as soon as possible, they are required to implement it by June 1.
Click here to view Fannie Mae’s complete Servicing Guide Announcement released Wednesday.