Servicing Guide

Published September 9, 2020

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Servicer Expense Reimbursement Job Aid (04/15/2020) Expense Types

Expense Types

Expenses for FHA, VA or Rural HUD Reimbursement    

Expenses associated with FHA, VA or Rural HUD loans must be pre-approved by the Fannie Mae Government Claims team. Fannie Mae will reimburse up to the pre-approval amount. If expenses are not pre-approved, the claim will be denied until pre-approval has been provided. Contact the Fannie Mae Government Claims Team for any questions or additional details.

Pre-approved expenses associated with these loans should be submitted using the LoanSphere Invoicing line item below.

20

General Services

159

FHA/VA/Rural HUD Reimbursement

 

Expenses for Third Party Sales

Expenses for third party sales may be pre-approved by the Fannie Mae. If expenses are not pre-approved, they will be reimbursed to the standard reimbursement guidelines for conventional foreclosed loans. Contact the Fannie Mae Third Party Sales Team for any questions or additional details.

Expenses associated with a third party sale that are pre-approved by the Fannie Mae should be submitted using the LoanSphere Invoicing™ line item below.

20

General Services

161

Third Party Sales Reimbursement

Attorney’s Fees and Costs

Attorney’s Fees associated with bankruptcy or foreclosure are paid up to the Fannie Mae published allowable. Additional fees may be pre-approved using the Investor Pre-Approval (IPA) approval process. Servicers needing access to the Attorney Authorization Approval (AAA) Matrix must contact their Fannie Mae Technology Manager and request Legal Document access to the Fannie Mae business portal. Attorney’s costs associated with a bankruptcy, foreclosure or other legal proceedings are requested on separate line items from attorney’s fees. Additional information about these expenses is provided below.

Attorney Transfers  

When Fannie Mae instructs servicers to transfer any legal matter from one attorney to another, an attorney file review fee is reimbursable. The servicer should clearly indicate the specific firms involved in the transfer within the expense details.  All other attorney transfers require excess fee approval to be reimbursed by Fannie Mae.

Attorney Transfer File Reviews should be submitted using the LoanSphere Invoicing™ line item below.

1

Attorney Fees

838

FC – Transfer File Review Fee

Bankruptcy Fees

The current Fannie Mae bankruptcy attorney’s fee schedule is available at: https://www.fanniemae.com/content/guide_exhibit/allowable-bankruptcy-attorney-fees.pdf.

Attorneys are responsible for seeking approval from the Fannie Mae Excess Fees and Costs Team for any reimbursable bankruptcy attorney’s fees not covered by an allowable bankruptcy fee. Attorneys must follow Fannie Mae’s established excess fee request process using the LoanSphere Invoicing System Investor Pre-Approval (IPA) module. Servicers should submit inquiries related to the excess fee process via the Inquiry Response Tool (IRT) or contact their Servicing Management representative.  

All bankruptcy claims must include the following information in the line item Detail:

  • Case Number

  • Chapter Number

  • Filing Date

NOTE: If these fields are not populated or if the service from date is prior to the bankruptcy filing date, the claim is placed into a Hold status upon submission. The exception tab will show which fatal exceptions are holding the claim from being submitted.

Court Costs   

Court costs may include a court-appointed representative as well as court transcripts or hearings. Documentation may be requested to support the expense. 

Deed-in-Lieu (DIL) Doc Prep Fees

An attorney may charge an additional cost to prepare documentation specifically for Deed-in-Lieu of Foreclosures. This cost is reimbursable once during the life of the loan and only if there is a closed Deed-in- Lieu.

Deed-in-Lieu Documentation Preparation Fees should be submitted using the LoanSphere Invoicing™ line item below.

22

Default Services Fee

1647

Deed-in-Lieu Doc Prep Fee

 

Filing Costs

Filing costs may be required for both bankruptcy and foreclosure filings. Documentation may be requested to support the expense.

Foreclosure Fees

Fannie Mae posts the current life of loan allowable foreclosure attorney’s fees at: https://www.fanniemae.com/content/guide_exhibit/allowable-attorney-trustee-foreclosure-fees.pdf
The allowable foreclosure attorney’s fees are dependent on the date the loan was referred to foreclosure and/or the actual foreclosure date. To ensure the accurate reimbursement of foreclosure attorney’s fees, servicers must populate the foreclosure referral date within the Referral Date field in the expense line item details. 

NOTE: If the referral date field is not populated or if the service from date is prior to the referral date, the claim is placed into a Hold status upon submission. The exception tab will show which fatal exceptions are holding the claim from being submitted.

Attorneys are responsible for seeking approval from the Fannie Mae Excess Fees and Costs Team for any reimbursable foreclosure attorney’s fees not covered by an allowable foreclosure fee. Attorneys must follow Fannie Mae’s established excess fee request process using the LoanSphere Invoicing System Investor Pre-Approval (IPA) module. Servicers should submit inquiries related to the excess fee process via the Inquiry Response Tool (IRT) or contact their Servicing Management representative.

Reimbursement of the fees required to dismiss a foreclosure action before or after entering a judgment should be submited using the LoanSphere Invoicing Foreclosure Dismissal Fee line item below. Hearing attendance is also included in the fee, when required.  
Line item information:

Category

Category ID

Subcategory

Subcategory ID

Attorney Fees

1

FC – Foreclosure Dismissal Fee

1565

Mediation

The current Fannie Mae mediation fees are available in the Attorney Authorization Approval (AAA) Matrix. Servicers needing access to the AAA Matrix must contact their Fannie Mae Technology Manager and request Legal Document access to the Fannie Mae business portal. 

Attorneys are responsible for seeking approval from the Fannie Mae Excess Fees and Costs Team for any reimbursable mediation fees not covered by the allowable amount. Attorneys must follow Fannie Mae’s established excess fee request process using the LoanSphere Invoicing System Investor Pre-Approval (IPA) module. Servicers should submit inquiries related to the excess fee process via the Inquiry Response Tool (IRT) or contact their Servicing Management representative.

Publication Costs

In accordance with Servicing Guide Announcement SVC-2017-09, Fannie Mae will reimburse one publication sale cost per delinquency. If multiple publication costs are incurred for the same foreclosure sale, servicers should aggregate the expenses into one request for reimbursement. In the event a foreclosure sale is rescheduled or the foreclosure is restarted, excess costs approval is required for expenses associated with additional foreclosure sale publication costs. Servicers should send inquiries about the excess costs process via the Inquiry Response Tool (IRT) or directly to their Servicing Management representative. 

Documentation may be requested to support the expense.

Recording Costs

Recording costs may include discharges/dismissals, foreclosure registrations, notices of default or sale, deed- in-lieu (DIL) or foreclosure deed recordings, and e-recordings. Documentation may be requested to support the expense.

Recording costs may also include transfer taxes, also known as document stamps, and mortgage taxes. Transfer taxes are always reimbursable if there is a closed DIL for the loan. If there is no closed DIL, transfer taxes are reimbursed on a case-by-case basis. Documentation may be requested to support the expense. Mortgage taxes may be required in some states as part of a modification. They are only reimbursable in Alabama, Florida, Kansas, Oklahoma, Minnesota, New York and Tennessee. Documentation may be requested to support these expenses.

Recording Costs for Charge Off – Lien Release

Recording costs associated with a Lien Release are reimbursable on Fannie Mae pre-approved Charge-off loans via a completed HSSN case.  Refer to Requesting Approval for a Charge-off of a First Lien Mortgage Loan within Fannie Mae Servicing Guide F-1-25 for guidelines.  Charge off – Lien Release expenses should be requested through LoanSphere Invoicing using the line item below.  Documentation may be requested to support the expense.

3

Recording Cost

3063

Charge off – Lien Release

Recording Fees for Paid Off Loans

Recording Fees for performing, paid-off loans are not processed through LoanSphere Invoicing. Servicers unable to legally charge the borrower for recording fees in connection with a paid-off loan may request reimbursement quarterly by emailing recording_fees@fanniemae.com. Initial submission instructions and request of the template can be obtained by emailing the same email address.

Sales Tax on Legal Fees

Sales tax on legal fees is reimbursable only for the sales tax incurred on the attorney’s general excise taxes in Hawaii and attorney’s gross receipts tax in New Mexico. Sales taxes incurred on other costs (legal or otherwise) are not reimbursable under this line item. Documentation may be requested to support this expense.

Legal Sales Tax should be submitted using the LoanSphere Invoicing line item below.

1

Attorney Fees

991

Legal Sales Tax

Service Costs

Service costs may include mailing expenses, notary costs, service of process costs and borrower locating services such as skip traces or private investigator services. Notary costs are only reimbursable when related to a modification or if they were incurred in Puerto Rico. Documentation may be requested to support the expense.

Sheriff’s Fees & Costs

Sheriff’s fees and costs are expenses incurred by the sheriff’s department as part of a foreclosure sale. Sheriff’s deposits are not reimbursable unless the cost sheet clearly indicates that the deposit has been credited to the outstanding balance. If the Sheriff’s cost sheet includes taxes, the taxes should be filed using tax line items. Documentation may be requested to support the expense.

Title Costs

In accordance with Servicing Guide Announcement SVC-2016-05, foreclosure title costs are reimbursable up to the published allowable amount.  Attorneys are responsible for seeking approval from the Fannie Mae Excess Fees and Costs Team for any reimbursable title costs not covered by an allowable title costs. Attorneys must follow Fannie Mae’s established excess fee request process using the LoanSphere Invoicing System Investor Pre-Approval (IPA) module. Servicers should submit inquiries related to the excess fee process via the Inquiry Response Tool (IRT) or contact their Servicing Management representative.
The allowable foreclosure title costs are dependent on the date the loan was referred to foreclosure and/or the actual foreclosure date. To ensure the accurate reimbursement of foreclosure title costs, servicers must populate the foreclosure referral date within the Referral Date field in the expense line item details. 

NOTE: If the referral date field is not populated, the claim is placed into a Hold status upon submission.

Title Costs associated with Bankruptcy, Deed-in-Lieu, or Modifications are also eligible for reimbursement. Documentation may be requested to support the expense.

Cash for Keys / DIL Relocation Expense

Cash for Keys is a way for homeowners to receive cash in exchange for turning in their keys and vacating the property. Fannie Mae will reimburse this expense up to the pre-authorized amount found in AMN once the DIL is closed. 

This expense should be submitted using the LoanSphere Invoicing line item below.

13

Eviction Costs

30

FNMA DIL Relocation Expense

Condominium Owner’s Association (COA) / Homeowner’s Association (HOA) Dues and Other Expenses

As outlined in the Fannie Mae Servicing Notice: “Eliminating Servicer Responsibilities for Paying HOA, COA, and Co-op Corporation Fees on Acquired Properties,” in effect since July 1, 2019, Fannie Mae is responsible for the payment of HOA and COA fees and assessments for all acquired properties regardless of foreclosure sale or Mortgage Release date. Servicers are no longer required to keep HOA/COAs current on Fannie Mae properties, unless specifically instructed to do so.  

Prior to this announcement, post foreclosure COA/HOA dues and expenses were the responsibility of the vendor for loans where the foreclosure sale or Mortgage Release date is on or after the dates outlined below:

Florida

January 1, 2016

Nevada & Illinois

July 1, 2016­

All Other States

April 1, 2017

For details on the above, see Fannie Mae Servicing Policy Announcements SVC-2015-14, SVC-2016-04, and SVC-2017-02.

COA and HOA dues for loans foreclosed prior to the dates listed above are eligible for reimbursement from foreclosure to July 1, 2019. Documentation may be requested to support the expense. 

Reimbursement of COA/HOA dues outside of that timeframe will be decisioned per the applicable state’s statute. State statutes also govern when other COA/HOA expenses such as attorney fees and other fees (interest, late fees, and fines/penalties) should be reimbursed. If the other expenses are permitted by the applicable state, Fannie Mae will reimburse these expenses with supporting documentation. If COA/HOA dues are paid annually, bi-annually, or quarterly, the servicer must indicate how often the dues are paid in the LoanSphere Invoicing Detail.

To ensure the accurate reimbursement of COA/HOA fees and assessments, servicers must populate the paid date within the Paid Date field in the expense line item details. If the paid date field is not populated, the claim is placed into a Hold status upon submission.

Late fees, attorney fees, penalties and interest, or any other COA/HOA-related fees should not be included in the dues amount. These expenses are reimbursable per each state statute but must be submitted separately. For information regarding guidelines per state statute, contact the attorney handling the foreclosure.  

Estoppel Fees are fees charged for an Estoppel Certification. Estoppel Fees are reimbursable. Documentation may be requested to support the expense.

Cooperative Corporation (Co-Op) Expenses

As outlined in the Fannie Mae Servicing Notice: “Eliminating Servicer Responsibilities for Paying HOA, COA, and Co-Op Corporation Fees on Acquired Properties,” as of November 1, 2019, Fannie Mae is responsible for the payment of Co-Op corporation fees and assessments for all acquired properties regardless of foreclosure sale or Mortgage release date. Servicers are no longer required to keep Co-Op dues current on Fannie Mae properties, unless specifically instructed to do so.  

For pre-foreclosure timeframes, Fannie Mae will reimburse Co-op dues as well as other associated legal fees and costs. Documentation may be requested to support the expense.

To ensure the accurate reimbursement of Co-Op fees and assessments, servicers must populate the paid date within the Paid Date field in the expense line item details. If the paid date field is not populated, the claim is placed into a Hold status upon submission.

Escrow Expenses

Fannie Mae will reimburse real estate taxes, flood and property insurance premiums that the servicer advances to protect our interest in the property when funds in the escrow account are not sufficient to cover these payments. This also applies to non-escrowed mortgage loans. These advances will be eligible for reimbursement without regard to when it was paid in conjunction with the last paid installment. 
Escrow advances are reimbursable even if the expenses were incurred prior to the mortgage loan becoming delinquent. However, for the servicer to request reimbursement for these expenses, the mortgage loan must have subsequently become delinquent. For more information, reference the Servicing Guide Announcement SVC-2018-04.
If a loan is escrowed, the last positive escrow balance must be credited to Fannie Mae before taxes and/or insurance will be reimbursed. This credit should be submitted using the LoanSphere Invoicing line item below.

101

Deductible

1

Escrow Balance (280)

If an escrow was provided to Fannie Mae in error, the servicer may request for it to be returned using the following line item:

20

General Services

160

Escrow/Refund Provided in Error

Property insurance premiums and their associated refunds are reimbursable until 14 days after the property is reported vacant. Documentation may be requested to support the expense. The servicer should indicate if the loan was escrowed or non-escrowed in the Detail section of LoanSphere Invoicing when submitting expenses for insurance premiums. The servicer should also indicate whether the policy is homeowner placed or lender placed.

Effective February 1, 2020, the servicer must  cancel any property insurance policy and flood insurance policy, if applicable, within 14 days of the foreclosure sale or the acceptance of an executed Mortgage Release™, regardless of whether there is an applicable waiting period, such as a redemption or court confirmation or ratification. Refer to Servicing Guide Announcement SVC-2019-07. For properties foreclosed prior to February 2020, policies must be cancelled within 14 days after the property appears on the Vacancy Report in HomeTracker®.

All lender placed policies must be cancelled or expired prior to requesting reimbursement.  A refund credit is required for all lender placed policies cancelled prior to the expiration date. If no refund is provided, the insurance premium is not reimbursable.

If the cancellation date is after the claim submission date, the claim is placed into a Hold status upon submission. The exception tab will show which fatal exceptions are holding the claim from being submitted.

Fannie Mae generally requires flood insurance for any property that is located in a Special Flood Zone. Lender placed flood premiums will only be reimbursed if the property is located in a Special Flood Zone. A flood certificate is required to validate the property is in a Special Flood Zone.
If insurance types such as wind, hurricane, earthquake, etc. are requested, servicers should document the type of insurance being requested in the Detail section of the claim line item in LoanSphere Invoicing.
If an insurance refund was provided to Fannie Mae in error, the servicer may request for it to be returned using the following line item:

20

General Services

160

Escrow/Refund Provided in Error

Taxes are reimbursable post-origination as long as the property was reported delinquent. Documentation may be requested to support the expense. The servicer should indicate if the loan was escrowed or non-escrowed in the Detail section of LoanSphere Invoicing™ when submitting expenses for taxes. 

Servicers must be familiar with current Fannie Mae policies before submitting requests for reimbursement of taxes. Refer to Requesting Reimbursement for Escrow Advances as well as the Defined Expense Reimbursement Limits within Fannie Mae Servicing Guide F-1-05 for guidelines.

As outlined in the Fannie Mae Servicing Policy Announcements SVC-2018-06, as of October 1, 2018, Post-Foreclosure Property Taxes are no longer the responsibility of the servicer for any Fannie Mae acquired properties. Prior to this announcement, post foreclosure property taxes were the responsibility of the vendor for loans where the foreclosure sale or Mortgage Release date was on or after the dates outlined below:

Florida

August 1, 2016

All Other States

August 1, 2017

In some instances, taxing authorities will require pro-rated taxes to be paid through liquidation in order to record the foreclosure deed. To be eligible for reimbursement, supporting documentation may be requested and the expense must be submitted using the LoanSphere Invoicing line item below:

Category ID

Category

Subcategory ID

Subcategory

106

Taxes

709

Property Tax – Deed Recording

Ground Rent

As outlined in the Fannie Mae Servicing Policy Announcements SVC-2018-06, as of October 1, 2018, Ground Rents are no longer the responsibility of the servicer for any Fannie Mae acquired properties. Documentation may be requested to support expenses associated with Ground Rent for a Leasehold Properties.  This expense should be submitted using the LoanSphere Invoicing line item below.

20

General Services

176

Ground Rent on Leasehold Property

Liens

Liens are reimbursable on a case-by-case basis depending on the type of lien. Liens will often require supporting documentation to support the expense. Fannie Mae may also require a copy of the recorded lien and a copy of the release of the lien. Fannie Mae will not reimburse liens that are a result of servicer negligence. Additional information about specific lien types are outlined below.

COA/HOA Liens are reimbursable based on the state statute or Fannie Mae’s pre-approval. For information regarding guidelines per state statute, contact the attorney handling the foreclosure.

Property Preservation Code Violations/Liens, Municipality Lien’s and Mechanic’s Liens are reimbursable as long as the code violation or lien was not due to servicer negligence.  For additional guidelines regarding property preservation, refer to the Fannie Mae Servicing Guide F-1-05: Expense Reimbursement.

DIL Lien and Second Lien Considerations are reimbursed to a pre-authorized amount included in the closed HSSN case.

Tax Liens can be placed due to unpaid taxes or unpaid utilities eventually added to the tax bill. The Tax Lien line item should only be used if the lien is related to unpaid taxes. Unpaid utilities should be requested to be reimbursed using the Delinquent Utility line item.           

Mortgage Insurance

Mortgage Insurance (MI) is reimbursable from last paid installment through the foreclosure month. Future dated MI is not reimbursable. Documentation may be requested to support the expense.   

Non-Recoverable Advances

Expenses incurred in connection with a reinstatement, payoff, or modification should be paid by the borrower or third party purchaser. Fannie Mae will only reimburse servicers if the expense is determined to be legally non-recoverable. Fannie Mae does not reimburse servicers for recoverable advances a servicer fails to collect. Documentation may be requested to support the expense.

LoanSphere Invoicing includes a Non-Recoverable drop-down option on every line item. Servicers must select Non-Recoverable from the drop-down when requesting reimbursement for any legally non-recoverable expense. Fannie Mae technology fees, disaster inspections on current properties, and administrative costs associated with modifications, are all non-recoverable and the Non-Recoverable drop-down should be selected.
LoanSphere Invoicing also includes a Not Yet Recovered drop-down option for applicable line items. Servicers must select Not Yet Recovered from the drop-down when requesting reimbursement for any advance that is recoverable at any applicable milestone. 
See screenshot below.

For additional expenses, Property Inspections, Property Preservation, Technology, Utilities, Vacant Property Registration, Valuations click here

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