Servicing Guide

Published October 14, 2020

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Is the servicer required to suspend all foreclosure and certain bankruptcy activities as a result of COVID-19?

NOTE: The response to this Q&A is directly from Fannie Mae Lender Letter (LL-2020-02), Impact of COVID-19 on Servicing.

UPDATED May 14, 2020, Jun. 24, 2020, Aug. 27, 2020

On Mar. 18, 2020, we instructed servicers that they must suspend all foreclosure sales for the next 60 days, unless the property securing the mortgage loan had been determined to be vacant or abandoned.

In response to the CARES Act, on Apr. 8, 2020, we acknowledged that the servicer was required to suspend foreclosure-related activities in accordance with the requirements of the CARES Act , which provides: “Except with respect to a vacant or abandoned property, a servicer of a Federally backed mortgage loan may not initiate any judicial or non-judicial foreclosure process, move for a foreclosure judgment or order of sale, or execute a foreclosure-related eviction or foreclosure sale for not less than the 60-day period beginning on Mar. 18, 2020.”

We previously extended the suspension of foreclosure-related activities through June 30, 2020 and subsequently through Aug.31, 2020.  We are now further extending the suspension of foreclosure-related activities through Dec 31, 2020.  During the period of the extension, servicers may not, except with respect to a vacant or abandoned property, initiate any judicial or non-judicial foreclosure process, move for a foreclosure judgment or order of sale, or execute a foreclosure sale.  This suspension does not apply to mortgage loans secured by properties that have been determined to be vacant or abandoned.

We generally require servicers to file motions for relief from the automatic stay in bankruptcy cases upon certain milestones. In light of the CARES Act and other impacts resulting from the COVID 19 National Emergency, on Apr. 8, 2020, we temporarily relieved servicers of the obligation to meet these timelines. We are continuing this temporary suspension. Servicers must continue to work with their bankruptcy counsel to determine the appropriate time to file such motions.

For more information see Fannie Mae Lender Letter (LL-2020-02), Impact of COVID-19 on Servicing.

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