Announcement SVC-2011-07 June 6, 2011
Updates to Foreclosure Time Frames and Imposition of Compensatory Fees
On April 28, 2011, the Federal Housing Finance Agency (FHFA) directed Fannie Mae and Freddie Mac to establish consistent mortgage loan servicing and delinquency management requirements. Consistent with the directive, this Announcement communicates to Fannie Mae servicers clear and consistent expectations regarding the maximum allowable time frame to complete the foreclosure process, and standardized requirements for determining compensatory fees for mortgage loans that are held in Fannie Mae’s portfolio or that are part of an MBS pool that has the special servicing option or a shared-risk MBS pool for which Fannie Mae markets the acquired property.
Updates to Allowable Foreclosure Time Frames
With this Announcement, Fannie Mae has updated the maximum number of allowable days within which routine foreclosure proceedings are to be completed in each jurisdiction as provided in the Servicing Guide, Part VIII, Section 104.08: Allowable Time Frames for Completing Foreclosure, and in Foreclosure Time Frames on eFannieMae.com.
The maximum number of allowable days within which foreclosure proceedings are to be completed denotes the maximum allowable time lapse between the day the case is referred to the attorney (or trustee) to commence a foreclosure action, and the completion of the foreclosure sale in each jurisdiction. The maximum allowable time lapse represents the time typically required for routine, uncontested foreclosure proceedings, given the legal requirements of the applicable jurisdiction, and takes into consideration delays that may occur outside of the control of the servicer.
Effective as of January 1, 2011, any Fannie Mae mortgage loan referred to an attorney (or trustee) to initiate foreclosure proceedings must not exceed the revised maximum number of allowable days within which routine foreclosure proceedings are to be completed as referenced in Foreclosure Time Frames.
Fannie Mae monitors the servicer’s management of the foreclosure process by reviewing each mortgage loan for which action was expected to be completed. Fannie Mae will utilize the delinquent loan status code data and other information collected from the servicer during other interactions to identify delays in the foreclosure process. If the number of days within which foreclosure proceedings for a mortgage loan are completed exceeds the maximum number of allowable days, and no reasonable explanation for the delay is provided to Fannie Mae through monthly delinquency status reporting or other information exchange protocols, Fannie Mae will require the servicer to pay a compensatory fee as outlined below. Examples of reasonable explanations for delays include bankruptcy; probate; military indulgence; contested foreclosure; cases where the mortgage loan is currently in review for the Home Affordable Modification.
Program or is in an active modification trial plan; or recent legislative, administrative, or judicial changes to existing state foreclosure laws – provided that the servicer is diligently working toward resolution of the delay to the extent feasible. Fannie Mae will not impose compensatory fees for delays beyond the control of the servicer, provided that the delinquency status codes reported by the servicer on the loan are timely and accurate.
Fannie Mae will continue to monitor foreclosure time frames and will periodically, pursuant to FHFA’s direction, adjust the time frame expectations on eFannieMae.com accordingly. Servicers are encouraged to review this information on a regular basis for updates.
Full announcements and state time frames below…