Servicing Guide

Published June 10, 2020

The Servicing Guide is organized into parts that reflect how lenders generally categorize various aspects of their business relationship with Fannie Mae. To begin browsing, select from any of the sections below. You may also download the entire Servicing Guide in PDF format.

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Fannie Mae Property Preservation Matrix and Reference Guide April 2019 (Section 11: Loans in Bankruptcy and/or Loss Mitigation)

Section 11: Loans in Bankruptcy and/or Loss Mitigation

Overview

Bankruptcy

Loss Mitigation

 

Overview

The servicer must inspect, protect, and preserve property while the loan is delinquent and the property is vacant. This is also required on loans in Bankruptcy and/or Loss Mitigation. Fannie Mae understands there may be additional requirements in order to perform these services under these circumstances. 

Bankruptcy

The servicer must consult with its legal department or bankruptcy attorney when addressing preservation issues for vacant properties in bankruptcy. The servicer must contact the debtor’s counsel and request permission to proceed with property preservation efforts at the first time vacancy date and when preservation work is noted by any subsequent vacant inspection. Once appropriate authorization is received, refer to Section 5: Initial Securing and Initial Services and Section 6: Ongoing Services in this Property Preservation Guide for further guidance.

When Submitting a Bid

When submitting bids on properties that are in (or have been) in bankruptcy, the servicer must provide the following information when submitting a  bid via HomeTracker:

•    Date bankruptcy was filed. 
•    Date bankruptcy ended, if applicable.  
•    Each date the property was reported vacant during bankruptcy.   
•    Each date the debtor’s counsel was contacted to request approval to preserve and protect the property and if that request was approved or denied.  

Note: When necessary, a Motion for Relief may be filed simultaneously when requesting permission from debtor’s counsel to proceed with preservation.

Loss Mitigation

The servicer must maintain vacant properties regardless of loss mitigation status and regardless of Quality Right Party Contact (QRPC). If a legally responsible party for the mortgage loan confirms that the property is being maintained, the servicer may choose not to complete maintenance during loss mitigation activities. The real estate agent/broker listing a property is not considered a legally responsible party. The servicer is responsible for ensuring the property is preserved and maintained even if the servicer allows the legally responsible party and/or the real estate agent/broker listing a property to preserve and maintain on the servicer’s behalf.

When Submitting a Bid

For properties that are in or have been in loss mitigation, the servicer must provide the following information when submitting a bid via HomeTracker:

•    Each date the property was reported vacant during loss mitigation.  
•    Each date the borrower or a legally responsible party confirmed the property was being maintained for each vacant inspection during loss mitigation.  

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