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GSEs Assess Fees for Servicers With Excessive Foreclosure Timelines

Bulletins issued by Fannie, Freddie

June 14, 2012

By staff

Mortgage servicers for the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. are being assessed fees when foreclosures exceed time limits established by the two government-controlled enterprises.

Fannie Mae has updated its compensatory fees and allowable foreclosure time frames.

Compensatory fees are assessed if the period from the first delinquency date until the foreclosure sale date exceeds the maximum allowable days as outlined in the Foreclosure Time Frames and Compensatory Fee Allowable Delays document online at

In Servicing Guide Announcement SVC-2012-11, the Washington, D.C.-based company explained that the fee will be determined based on a comparison of the time it took to complete the foreclosure and the allowable time from for a given location.

Fannie will calculate the fee using the unpaid principal balance of the mortgage loan, the applicable pass-through rate and the number of days the loan exceeded or preceded the applicable standard.

Servicers will earn a credit for foreclosures that take less time than the standard, and the credit can be applied to transactions completed during the same billing month in the same state where compensatory fees were assessed. Aggregate compensatory fees of less than $1,000 during a single month will be waived.

Servicers can appeal the fees when the delays were outside their control. Supporting documents can include attorney chronologies, servicing notes and court documents. Services will receive appeal templates and instructions with compensatory invoices.

Allowable delays include unemployment forbearance and delays due to urgent or unforeseeable circumstances or for situations in which applicable law necessitates additional time.

Fannie said it increased the allowable time to complete a foreclosure in Arkansas, Connecticut, Delaware, Florida, Idaho, Maryland, New Jersey, New Mexico, Upstate New York, Down State New York, North Dakota and Puerto Rico. The secondary lender also corrected the preferred method of foreclosure to non-judicial in Montana and Nebraska.

The updates impact transactions where foreclosure proceedings were initiated beginning on Jan. 1, 2012.

In bulletin No. 2012-13, Freddie Mac issued revised foreclosure timelines and compensatory fee requirements.

Delays tied to loan modifications, chapter 11 bankruptcies and unemployment forbearance are among allowable delays at the McLean, Va.-based firm. Also acceptable are delays related to contested foreclosures, probate and military servicemembers.

Freddie outlined an appeal process similar to Fannie's.

Freddie's updates immediately take effect for all foreclosures initiated on Jan. 1 or later.

read Fannie Mae Servicing Guide Announcement SVC-2012-11

read Freddie Mac bulletin No. 2012-13

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