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1.5.4.1 Mandates to Servicers

Significant Law Change

A key resource for Fannie Mae disaster relief policies is their Hurricane Relief website, available at www.fanniemae.com.152 Like Freddie Mac, Fannie Mae requires that servicers:

  • ● Waive late charges;153
  • ● Suspend credit reporting of delinquencies “if it is aware that the delinquency is attributable to a hardship as a result of the disaster;”154
  • ● Suspend all foreclosure sales and evictions for ninety days for borrowers with homes located in disaster-declared areas;155
  • ● Suspend eviction lock-outs on REO properties until January 2, 2018;156 and
  • ● Suspend any legal proceedings already in process (if the servicer has any reason to believe that a disaster may have affected the condition of a property or the homeowner’s employment or income status), the servicer must until it can determine the accurate status, and make its final decision on the appropriate course of action based upon its findings.157

Unlike Freddie Mac, which seems less protective of homeowners suffering a disaster, Fannie Mae mandates that a servicer must grant disaster relief when—

  • ● The servicer is unable to contact a borrower who may have been impacted by a catastrophe that was caused by nature or a person other than the borrower; and
  • ● The servicer has determined that such an event may adversely affect either the value or habitability of a property securing a mortgage loan, or the borrower’s ability to make further payments or payment in full on a mortgage loan.

The servicer must receive Fannie Mae’s approval before granting disaster relief that exceeds ninety days.158 However, the issue of whether to grant a forbearance is still in the discretion of the servicer.

Footnotes

  • 152 See also Fannie Mae Single Family Servicing Guide, available at https://www.fanniemae.com.

  • 153 Fannie Mae Single Family Servicing Guide D1-3-02.

  • 154 Fannie Mae Single Family Servicing Guide D1-3-02.

  • 155 Fannie Mae, Lender Letter LL-2017-06 (Sept. 13, 2017), available at https://www.fanniemae.com; Fannie Mae, Lender Letter LL-2017-03 (Aug. 29, 2017), available at https://www.fanniemae.com. However, if the premises were vacant or abandoned prior to either hurricane, and the servicer has completed its property inspection and confirmed that there is no damage to the property or damage that is not covered by insurance (or eligible to receive state or federal disaster assistance) or ability to receive FEMA funds, the servicer may proceed with the sale prior to December 31, 2017. When applicable, servicers must receive pre-approval by the mortgage insurer or guarantor to suspend the foreclosure sale to avoid jeopardizing benefits of any applicable insurance or guaranty. Fannie Mae, Lender Letter LL-2017-06 (Sept. 13, 2017), available at https://www.fanniemae.com.

  • 156 Fannie Mae, Lender Letter LL-2017-06 (Sept. 13, 2017), available at https://www.fanniemae.com.

  • 157 Fannie Mae, Hurricane Relief Frequently Asked Questions (FAQs), Q16, available at www.fanniemae.com. See also Fannie Mae, Single Family Servicing Guide D1-3-02 (“If the servicer has any doubt about the effect of the disaster on the condition of a property or the borrower’s employment or income status, it must suspend any legal proceedings already in process until it can determine the accurate status, and make its final decision on the appropriate course of action based upon its findings. The servicer must receive Fannie Mae’s approval before granting disaster relief that exceeds 90 days. The servicer must not initiate or complete foreclosure proceedings related to a property that has been destroyed until it evaluates the economic feasibility of pursuing the foreclosure.”).

  • 158 Fannie Mae Single Family Servicing Guide D1-3.