Fannie Mae addressed a host of issues, including vendors used by attorneys and trustees and fees charged, in a communication to mortgage servicers. A clarification was issued on foreclosure actions in the name of Mortgage Electronic Registration Systems.
The secondary lender clarified an earlier announcement by stating that MERS must not be named as plaintiff or foreclosing party in any foreclosure action. If MERS is the mortgagee of record, an assignment will need to be executed from MERS to the servicer. Foreclosures can only begin after the recording of the assignment unless the jurisdiction doesn’t require such.
Loans that are cured won’t necessarily require reassignment back to MERS as long as the assignment from MERS to Fannie or the servicer was recorded.
Fannie outlined the MERS requirement, as well as several other issues, today in Announcement SVC-2010-10.
The date of loss mitigation eligibility cannot be more than 90 days from financial documentation supporting income, expenses, assets and liabilities. The update impacts loss mitigation options entered into on or after Sept. 1.
HomeSaver Advance is being retired on Sept. 30 as a result of low volume accompanied by other workout alternatives.
Mandatory listing periods of three months are being eliminated on deeds-in-lieu of foreclosure, and servicers can recommend a deed-in-lieu as long as all other requirements set out in Part VII, Section 606 are met.
Servicers will no longer be allowed to require attorneys or trustees to use specific vendors on Fannie referrals. Included among the covered vendors are title companies, posting and publication vendors and service of process firms. Prior approval from Fannie will be required for vendors affiliated with the servicer.
In 31 jurisdictions, Fannie mandates the use of its attorney network for foreclosure and bankruptcy referrals, though special guidelines apply in Arizona, California and Washington.
Files being transferred between law firms or trustees will require Fannie’s prior written approval.
According to the Washington, D.C.-based company, servicers and the firms they engage cannot charge an outsourcing fee, referral fee, packaging fee or other similar fees to attorneys or trustees.
“Technology charges” paid by attorneys or trustees will be limited to $25 for the life of the loan as of Sept. 1. In addition, a $10 cap is being placed on how much an attorney or trustee can pay for the submission of electronic invoices over the loan life “regardless of the number of reinstatements, foreclosure referrals, bankruptcy filings or invoices submitted.”
Servicers were reminded that they are responsible for paying taxes and insurance on loans with no escrow accounts when the borrower fails to make the payments.