Servicing Guide

Published September 9, 2020

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Fannie Mae Property Preservation Matrix and Reference Guide April 2019: (Section 8: Damaged Properties/Disaster Impacted Properties)

Section 8: Damaged Properties / Disaster Impacted Properties Damaged Properties Overview

Roof Damages

Freeze Damages and Broken/Missing Pipes

Demolition/Condemnation

Flood Damage

Vacant Lot

Disaster Impacted Properties Overview

Determining Damage and Inspecting Properties Impacted by Disaster

Performing Repairs and Addressing Urgent Conditions for Properties Damaged by a Disaster

Damaged Properties Overview

When damages are found upon initial and/or ongoing services that may result in further damage to the property if not addressed, the servicer must attempt to repair those damages using the allowable(s). When the cost to repair damage exceeds the allowable(s) or an allowable does not exist, the servicer must submit over allowable bid(s) to repair the damage within fifteen (15) calendar days of the initial services completion or the date of discovery, whichever comes later, as a HomeTracker bid request. The servicer must provide all mandatory data/attachments required for the bid submission and any additional relevant information. Fannie Mae reserves the right to request additional bids and/or information at any time. The servicer will have seven (7) calendar days from the Fannie Mae bid response date to submit requested subsequent bids and/or additional information for reconsideration.

An insurance/proof of loss claim must be filed on insurable damages prior to repairs being made. Insurance proceeds must not be used for repairing the property unless approved by Fannie Mae. The servicer must refer to the insurance requirements found in Servicing Guide B-5-01: Insured Loss Events for further guidance.

Roof Damages

The servicer must complete interior monthly inspections on a delinquent and vacant property. When a roof leak or an ineffectively tarped roof is discovered upon initial and/or ongoing services, appropriate measures must be taken to preserve the property by stopping the leak. The servicer must attempt to repair the roof using the Patch/Repair Roof Allowable. When the cost to repair exceeds the allowable(s), the servicer must tarp the roof within the allowable and submit over allowable bid(s) to repair the roof if possible and replace the roof when it is beyond repair. Should the servicer identify new roof damage caused by a claimable peril, the servicer may tarp the roof using the Patch/Repair Roof Allowable until the insurance adjuster inspects the property.

When the servicer determines that a roof is beyond repair and replacement is necessary, the servicer must submit bids via HomeTracker.

When to Submit a Bid 

Include: 

•    One bid to tarp the roof if not already tarped.  
•    Two bids to replace the entire roof from two separate qualified/licensed/certified roofing contractors on their company letterhead with the line by line estimate and include: 

  •      Full scope of work
  •      Square feet o Cost  

•    Supporting documentation must include a satellite roof measure report. This report should be bid on a separate roof replacement bid line in HomeTracker. PremiumReport by EagleView® is approved for use and reimbursement by Fannie Mae. All other satellite roof measure reports must be approved by Fannie Mae prior to use. When a detached structure needs a roof repair or replacement, an EagleView report is not required and should not be obtained unless requested by Fannie Mae. 

•    All insurance documents for any and all claims made on the property including, but not limited to, Notice of Claim (NOC), Explanation of Benefits (EOB), adjuster’s estimate, and/or denial letter(s) if applicable. 

  •      Note: Cost estimators are permissible when a second qualified roofing contractor bid is unattainable.

Note: Fannie Mae has made a Roof Replacement Checklist, available in the Learning Center of 

HomeTracker, to help servicers ensure all required items are provided in the bid submission. To obtain the Fannie Mae discounted price for the PremiumReport by EagleView, visit www.eagleview.com. Servicer and/or their vendor will need to provide the following information:  

•    Company Name 
•    Company address 
•    Company Phone Number 
•    Individual First and Last Name 
•    Email Address (to be used to log in and submit requests) 

If you have any questions about this process, email property_preservation@fanniemae.com.  

When a tarp has been installed on the roof, the servicer must additionally inspect the interior and exterior of the property more frequently to validate the continued effectiveness of the tarp. When the tarp becomes ineffective, the servicer must submit bids to tarp/patch/repair per the guidelines. 

When Submitting a Bid 

Refer to Section 2: Technology and Photos within this Property Preservation Guide for bid submission guidance and include the following:  

•    Provide the dimensions of the affected area (square footage). 
•    Provide specific interior location of the damage (e.g., the corner of the kitchen ceiling above the sink). 
•    Include full photo documentation including interior and exterior photos where leak is present.  
•    Provide photos taken from the roof, as well as from the ground. 
•    Provide date damage was first identified. 

Freeze Damages and Broken/Missing Pipes

When the property has freeze damage and/or broken/missing pipes which are: unable to be capped; will cause further damage to the property if not corrected; or is necessary in order to make another repair to prevent damage to the property if not addressed, the servicer must ensure the following:

•    Water is shut off at the curb and at the main interior. 
•    All open water lines are capped as applicable. 
•    Ensure property is winterized. Refer to Winterization / Re-winterization within Section 5: Initial Securing and Initial Services in this Property Preservation Guide for further guidance. 
•    File an insurance/proof of loss claim when damage is insurable. 
•    Complete any necessary work within allowable. 
•    Submit over allowable bids necessary to prevent further damage. 

When Submitting a Bid

Refer to Section 2: Technology and Photos within this Property Preservation Guide for bid submission guidance and include the following:

•    Provide each date the property was winterized.  
•    Indicate whether the property was fully or partially winterized.  
•    Indicate whether the system held pressure during each winterization.  
•    Provide date the water was turned off at the main interior shut off and at the curb.  
•    Include supporting photos for each winterization. 

What To Do If

If…

Then…

The pipes are missing and will not result in further damage, 

Cap all open lines within the allowable. File an insurance/proof of loss claim, if necessary. Do not submit bids to replace missing pipes.

There is ice present inside the property such as a toilet, basement, plumbing fixtures, etc., 

Shut off water at the curb and at the main interior. Submit a bid for a controlled thaw. File an insurance/proof of loss claim, if necessary. Complete all other work within allowables, as applicable.

Demolition/Condemnation

When a servicer receives notification regarding a potential demolition, condemnation, or uninhabitable property, certain steps must be taken to ensure that Fannie Mae’s interests are protected. Refer to Section 10: Code Violations and/or Citations in this Property Preservation Guide for further guidance on violations. The servicer must ensure the property is properly secured and the exterior of the property is maintained (grass cut, tree/shrub trimming, debris removal, etc.) by utilizing any available allowables.

The servicer must provide all mandatory data and attachments required for the bid submission and any additional relevant information. Fannie Mae reserves the right to request additional bids and/or information at any time. The servicer will have seven (7) calendar days from the Fannie Mae bid response date to submit requested subsequent bids and/or additional information for reconsideration

When Submitting a Bid

The servicer must provide the below information to Fannie Mae within fifteen (15) calendar days of the notification of the demolition or condemnation. Refer to Section 2: Technology and Photos within this Property Preservation Guide for bid submission guidance and include the following:

•    Provide two demolition bids and two repair bids simultaneously.  
•    Ensure contractors are qualified/licensed/certified in demolition (typically not a maintenance contractor). 
•    Ensure each bid submitted includes the full demolition scope on company letterhead with line by line estimate. 
•    Provide the date the servicer first received each violation(s), demolition, or condemnation notice.  
•    Provide details of any fines/fees/liens that have been assessed or are accumulating and at what frequency (for example, $10,000 lien for the roof damage and fines accruing at $500 per day beginning January 1, 2017).  
•    Include city code enforcement name, phone number, email address, and any other relevant contact information.  
•    Provide legible copies of all demolition notices and violations, as well as the last three inspections and related photos.  
•    Include any legal actions taken by servicer/servicer attorney and whether servicer’s legal contact has reviewed the proposed demolition and determined it complies with all applicable law. 
•    Provide hearing information including: 

  •      Date of the hearing.  
  •      The outcome of the hearing (e.g., Demolish Order has been approved. City is proceeding with the demo. The hearing has been rescheduled.) 
  •      Date the city obtained the permits for the demolition. 
  •      Date the demolition is scheduled to begin. 

•    Provide all insurance information, including but not limited to: 

  •      Date claim was filed. 
  •      Status of the claim (e.g., adjuster has been to the property, waiting on adjuster’s report; claim is approved, waiting on explanation of benefits (EOB) and adjuster’s estimate.) 
  •      Indicate if the claim is settled (either approved or denied), upload claim documents including letter of approval or denial, EOB and adjuster’s estimate, if applicable. 
  •      Indicate if the claim has been paid and the insurance/proof of loss check has been cashed, confirm insurance/proof of loss funds are in escrow. If funds are not in escrow, advise to the location of the funds and provide loss draft reports. o Indicate if the claim has been paid and the insurance/proof of loss check has not been cashed, provide copy of the check and advise status of check. o Indicate if the claim has been denied, upload claim documents validating denial reason and any disputes if appropriate or follow ups as necessary. 

Note: Fannie Mae has made a Demolition Checklist, available in the Learning Center of HomeTracker, to help servicers ensure all required items are provided in the bid submission.

From time to time, the servicer may receive notice of a legal action impacting Fannie Mae’s interest (e.g., a receivership, condemnation action, a probate proceeding, a partition action, a quiet title action, a code violation notice, a tax sale, or a subordinate loan foreclosure). The servicer is responsible for handling these types of legal actions in accordance with the requirements set forth in Servicing Guide D1-6-02: Handling Notices of Liens, Legal Action, Other Actions Impacting Fannie Mae’s Interest.

Flood Damage

When the property is flooded or has previously been flooded, appropriate measures must be taken to preserve the property. The servicer must utilize any available allowable(s) to pump water, address the source of the flood and any resulting damages, when applicable. The servicer must submit a bid to address the source and/or repair damage within fifteen (15) calendar days of pumping the water when the source and/or damage could not be addressed within the allowable.

When the allowable has been exhausted, the servicer may elect to pump water and then submit a bid after the fact via HomeTracker. Bids to address the source and any resulting damages from the water intrusion (that could not be completed within the appropriate allowable thresholds) should be submitted as an over allowable bid along with the bid after the fact for water pumping.

When Submitting a Bid

Refer to Section 2: Technology and Photos within this Property Preservation Guide for bid submission guidance and provide all insurance information, including but not limited to:

•    Provide date claim was filed. 
•    Provide status of the claim (e.g., adjuster has been to the property, waiting on adjuster’s report; claim is approved, waiting on EOB and adjuster’s estimate.) 
•    Indicate if the claim is settled (either approved or denied), upload claim documents including letter of approval or denial, EOB and adjuster’s estimate, if applicable. 
•    Indicate if the claim has been paid and the insurance/proof of loss check has been cashed, confirm insurance/proof of loss funds are in escrow. If funds are not in escrow, advise the location of the funds and provide loss draft reports. 
•    Indicate if the claim has been paid and the insurance/proof of loss check has not been cashed, provide copy of the check and advise status of check. 
•    Indicate if the claim has been denied, upload claim documents validating denial reason and any disputes if appropriate or follow ups as necessary. 

Vacant Lot 

When a servicer finds a vacant lot at initial and/or subsequent inspections or through another notification, the servicer is to utilize any necessary allowable(s) to maintain the lot and notify Fannie Mae’s Property Preservation team via email at property_preservation@fanniemae.com.

When emailing the property preservation mailbox, the servicer must provide the following in HomeTracker, under the “Attachments” and/or “Case Notes” tab(s):

•    List of ALL inspections completed including inspection completion date and occupancy status. The servicer is not required to attach actual inspection results. 
•    Date property was initially secured after vacancy (servicer gained access), if applicable. 
•    All initial secure photos to include property condition photos, if applicable. 
•    Insurance documents (Explanation of Benefits (EOB), adjuster’s estimate, and/or denial letter) if applicable. 
•    Reason for vacant lot (i.e., structure relocated, demolished, etc.). 
•    If the property was demolished, include: 

  •      Person or entity that demolished the property (i.e., borrower, city, etc.).
  •      Date of demolition. 
  •      Reason for demolition (i.e., fire, structural failure, condemnation, etc.). 

•    Legible copies of all demolition notices and/or code violations, if applicable. 
•    Details of any fines/fees/liens that have been assessed or are accumulating and at what frequency, if applicable. 

If the cost to maintain the vacant lot exceeds the allowable(s), bids for the over allowable maintenance must be submitted via HomeTracker 

When Submitting a Bid

Refer to Section 2: Technology and Photos within this Property Preservation Guide and provide the following information:

•    All details on the demolition. 
•    All details on any litigation. 
•    All details on any violations and any fines/fees/liens.  
•    Any insurance/proof of loss claim funds available and whether deposited or released

Disaster Impacted Properties Overview

When a disaster event occurs, the servicer must adhere to policies set forth in Servicing Guide D1-3-01: Evaluating the Impact of a Disaster Event and Assisting a Borrower. Additional information regarding the preservation of properties impacted by disasters are outlined in the sections below.

Determining Damage and Inspecting Properties Impacted by Disaster

In the event of a disaster, the servicer must determine the extent and nature of any damage to the property (see Servicing Guide D1-3-01: Evaluating the Impact of a Disaster Event and Assisting a Borrower). After a disaster, the borrower may not be living in the property but intends to return. The servicer must also attempt to confirm the borrower’s intent to return through reasonable means, such as contact with the borrower or posting vacancy notices.

What To Do If

The following table outlines the servicer’s responsibilities when the servicer learns a property is damaged.

If at the time of the disaster the mortgage loan is…

Then the servicer must…

Current

Follow applicable Servicing Guide requirements, depending on whether the damage is an insured or uninsured loss and/or whether emergency repairs are needed. 

Delinquent and the property is occupied,

Continue at least monthly property inspections until the damage is remediated or the property is identified as vacant.

After the damage is remediated follow applicable Servicing Guide requirements, or after the property is identified as vacant, follow the vacant property guidelines within this table.

The servicer must conclude the property is vacant if the borrower has advised as such. The servicer may also use a vacancy notice posting where law allows. The servicer must immediately secure the property once it concludes the property is vacant.

 

If at the time of the disaster the mortgage loan is…

Then the servicer must…

Delinquent and the occupancy status is unknown,

Continue at least monthly property inspections until the damage is remediated or the property is identified as vacant or occupied. After the damage is remediated, follow applicable Servicing Guide requirements. Once the property is identified as vacant, the servicer must follow the vacant property guidelines within this table.

The servicer must conclude the property is vacant if the borrower has advised as such. The servicer may also use a vacancy notice posting where law allows. The servicer must immediately secure the property once it concludes the property is vacant.

Delinquent and the property is vacant,

Immediately commence work necessary to inspect and preserve the property.

 

For scenarios not specifically covered in the above table or for additional requirements for properties impacted by a disaster event, see the following the Servicing Guide topics:

•    D1-3-01: Evaluating the Impact of a Disaster Event and Assisting a Borrower, for guidance on determining the extent and nature of any property damage, and the servicer’s responsibilities when a borrower is affected by a disaster event; 

•    D2-2-10: Requirements for Performing Property Inspections, for guidelines on inspecting a property securing a delinquent mortgage loan, inspecting and repairing a property in disrepair and in need of urgent repairs, and inspecting and protecting vacant or abandoned properties;  

•    B-5-01: Insured Loss Events, for information on the servicer’s responsibilities when the property suffers an insured loss, including filing of insurance claims, plans for repairs when the property can be rebuilt, inspecting repairs, and disbursing insurance loss proceeds based on the mortgage loan status and borrower’s intent; and 

•    B-5-02: Uninsured Loss Events, for the servicer’s responsibilities in addressing an uninsured loss to the property, including developing plans to repair the property. 

See also Section 3: Inspections within this Property Preservation Guide for additional information on property inspection and preservation requirements.

Performing Repairs and Addressing Urgent Conditions for Properties Damaged by a Disaster

The servicer must proceed with initial securing requirements when applicable and follow the Bid After The Fact (BATF) protocol when appropriate. When the servicer determines that there are damages to the property, the servicer is encouraged to address urgent conditions immediately with temporary repairs, as necessary and prior to Fannie Mae approval for matters outside the allowable threshold, in accordance with the BATF process outlined in Section 12: Bid After The Fact of this Property Preservation Guide. Servicer must submit all BATFs within fifteen (15) calendar days of the completion of work and must include before, during, and after photos as well as haul away photos, when applicable. Fannie Mae will give deference to servicer decisions on such repairs and will approve BATF requests as long as the preservation repairs and associated costs keep with the intended spirit of Fannie Mae’s disaster assistance policies and are not materially unreasonable or unnecessary, as Fannie Mae recognizes that there may be restraints to materials as well as increased costs of resources (labor, supplies, etc.) due to demand and limited availability.

If the property has been damaged but the damage does not affect the safety, soundness, or structural integrity of the property and the repair items are covered by insurance, the servicer must not make any permanent repairs until the insurance adjuster has had the opportunity to assess the damage. After the insurance adjuster has assessed the damage, the servicer must submit applicable bids via HomeTracker (if servicer is unable to complete within appropriate allowable thresholds) to make those permanent repairs that will cause further damage if not addressed.

If the servicer determines that the property is a candidate for demolition, the servicer must assess the condition and secure the property to avoid safety hazards, ensure a hazard insurance claim is filed and submit bids to demolish the property via HomeTracker. Refer to Demolition/Condemnation within this section for further direction.

Servicers must document all damage before preserving and/or removing any damaged material from the property. The following table addresses service line items that may be present in a disaster and guidelines for the servicer to follow in these instances.

Servicer Type

Instruction

Utility Transfers / Shut Off

If the electricity is on, turn it off at the main. Only turn electricity back on once it is confirmed safe and needs to be on (i.e., sump pumps).

 

Pump/Remove Water

Pump out any water from structure(s) and clean up any remaining mud/silt left on the floor. Refer to Section 5: Initial Securing and Initial Services within this Property Preservation Guide for additional information.

 

Address Discoloration

 

Remove wet drywall and clean the framing/studs left exposed (behind the discolored surface) with an antimicrobial solution and apply a stain blocking primer when applicable. Remove any resulting debris from the property. Refer to Section 5: Initial Securing and Initial Services within this Property Preservation Guide for additional information.

Other

 

In the event of water damage, and drywall must be removed, it is recommended to initiate full dry-out with fans.
 

Servicer Type

Instruction

Debris Removal Interior/Exterior

Remove wet debris from the interior of the property to clear any hazards and to prevent any potential future damage. Remove any exterior debris blown into the yard, fallen from the roof and/or hanging from the trees including branches. If in a FEMA pick-up area, debris must be moved to the curb. If FEMA is no longer picking up or property is not located in a FEMA pick-up area, work completion photos need to include haul away of debris for consideration of additional funds. Servicers must submit requests for approval over the max allowable for the life of the loan in HomeTracker as a BATF with proper documentation. Refer to Section 5: Initial Securing and Initial Services within this Property Preservation Guide for additional information.

 

Repair/Replace Exterior Door and Repair/Replace Exterior Door Jamb

Secure doors on all structures that have been damaged due to vandalism or warped from water exposure for an extended period of time. Refer to Section 5: Initial Securing and Initial Services within this Property Preservation Guide for more information.

 

Repair/Replace Windows

 

If re-glazing/repairing the window is not an option, clear boarding is required in cases where plywood would have previously been utilized on windows. Refer to Section 5: Initial Securing and Initial Services within this Property Preservation Guide for additional information.

Roof Work Patch/Repair Roof

 

Tarp any structure that has an active leak or known damage that would allow water intrusion. Refer to Section 5: Initial Securing and Initial Services within this Property Preservation Guide for additional information.

 

Pump Repair/Replace Sump Pump

 

Restore/Replace any inoperable sump pump. Ensure that electric is determined safe before restoring power for sump pump operation. Refer to Section 5: Initial Securing and Initial Services within this Property Preservation Guide for additional information.

Moisture Control

Utilize moisture control product in areas with minimal air movement. Refer to Section 5: Initial Securing and Initial Services within this Property Preservation Guide for additional information.

 

Refer to Section 12: Bid After The Fact within this Property Preservation Guide for additional guidelines. See also Servicing Guide D2-2-10: Requirements for Performing Property Inspections for additional information.

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