Servicing Guide

Published November 17, 2021

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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-2021-02), Impact of COVID-19 on Servicing.

UPDATED Jan. 20, Feb. 10, Feb. 25, Jun. 24, Jun. 30

On Jun. 24, 2021, Fannie Mae extended the existing suspension of certain foreclosure-related activities through Jul. 31, 2021. On Jun. 28, 2021, the Bureau of Consumer Financial Protection issued a final rule entitled "Protections for Borrowers Affected by the COVID-19 Emergency Under the Real Estate Settlement Procedures Act," 12 C.F.R. Part 1024 (the "Final Rule"). The effective date of the Final Rule is Aug. 31, 2021.

Servicers must continue the suspension of the following foreclosure-related activities through Jul. 31, 2021. 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.

During the period between the end of the suspension of foreclosure activities outlined above (Jul. 31, 2021) and the effective date of the Final Rule (Aug. 31, 2021), servicers must not take any action that would violate the Final Rule if it were in effect during that period. Foreclosure activities that would not violate the Final Rule were it in effect during such period may proceed from and after Aug. 1, 2021.

We generally require servicers to refer to counsel motions for relief from the automatic stay in bankruptcy cases upon certain milestones, e.g., within two weeks of a borrower becoming 60 days delinquent in making the payments required by a plan. In light of the Coronavirus Aid, Relief, and Economic Security Act ("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 ending the temporary suspension. In an effort to assist servicers with managing volume upon termination of the temporary suspension, effective Jul. 31, 2021 servicers must refer to counsel motions for relief from the automatic stay in bankruptcy cases in accordance with the timeline described in the following table.

If in accordance with Section E-2.2, Managing Bankruptcies by Chapter a motion for relief from the automatic stay…              Then the servicer must refer to counsel the motion for relief…
would have been required on or before Jul. 31, 2021 no later than Nov. 1, 2021.
is required between Aug. 1, 2021 and Sep. 30, 2021 within 90 days.
is required between Oct. 1, 2021 and Jan. 1, 2022 within 60 days.
is required after Jan. 1, 2022 in accordance with Section E-2.2, Managing Bankruptcies by Chapter

For more information see Fannie Mae Lender Letter (LL-2021-02), Impact of COVID-19 on Servicing.

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