|
Warning to Servicers: Fannie Mae is Watching for Delays
Fannie Mae has put loan servicers on notice: take too long to complete foreclosures and you could face fines.
Through a recent announcement, the government-sponsored enterprise has created timeframes for completing foreclosure proceedings (see their foreclosure timeframes for more information on a state-by-state basis). For servicers unable to provide a reasonable explanation for delaying proceedings, Fannie Mae may levy what it’s calling “compensatory fees for breach of servicing obligations.” However, delays beyond the control of the servicer will not be held against them.
Regarding these delinquent loans, Fannie Mae stated it would monitor “all whole mortgages, participation pool mortgages, and MBS pool mortgages with a special servicing option referred to an attorney or trustee to initiate foreclosure proceedings on or after July 1, 2010”. In its National Delinquency Survey, the Mortgage Bankers Association reported 13.97 percent of all mortgages were either delinquent or in the foreclosure process in the second quarter of 2010.
Here are some additional highlights from the announcement:
With this Announcement, Fannie Mae:
§ has updated the allowable foreclosure time frames for four states;
§ is monitoring all delinquent loans in Fannie Mae’s portfolio or MBS pools, and will begin notifying servicers of delays in processing delinquent loans;
§ may begin conducting reviews of servicer loan files, processes, or procedures;
§ requires accurate and timely reporting on the delinquency status of mortgage loans; and,
§ will exercise its remedy to assess compensatory fees as deemed necessary.
The announcement also includes a chart of compensatory fees for specific circumstances. We’ll continue to post updates and results from this initiative as they happen.
|