Servicing Guide

Published September 9, 2020

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Fannie Mae Property Preservation Matrix and Reference Guide April 2019 (Section 10: Code Violations / Citations)

Section 10: Code Violations / Citations

Code Violations / Citations

The servicer is expected to communicate regularly with Code Enforcement authorities, as well as any HOA on all issues pertaining to Fannie Mae properties. Within fifteen (15) calendar days of discovery of violation(s) at the property, the servicer must check with HOA and local municipalities to obtain information regarding any outstanding issues/violations/fines/fees on any maintenance, utility, permit(s), property registration, or other property related issues. If the violation is unclear or while the servicer is waiting for clarification from the city or HOA, the servicer must still continue with all necessary preservation within the allowable thresholds.

If a violation exists, the servicer must determine if work is completed.

If work is not completed AND work can be completed within allowable threshold(s), the servicer must complete work within fifteen (15) calendar days of notification of violation. If work cannot be completed within allowable threshold(s), the servicer must submit an over allowable bid request within fifteen (15) calendar days of notification of violation.

When Submitting a Bid

The servicer must include the following with the bid submission:

•    The scope of work required by the municipality/association to cure the violation(s). 
•    The date on which the servicer first received the violation(s). 
•    Any fines/fees/liens that have been assessed or are accumulating and at what frequency (e.g., $10,000 lien for the roof, fines are accruing at $500 per day beginning January 1, 2017). 
•    Legible copy of the violation(s). 

Follow Fannie Mae guidance per bid response. Once the violation is cured, negotiate any associated fines/fees/etc. as appropriate.

•    Pay the violation and follow reimbursement guidelines as outlined in Section 16: Reimbursement Requests in this Property Preservation Guide if fees are less than or equal to the allowable threshold.  
•    Submit an over allowable bid for fines/fees/etc. if fees are greater than the allowable threshold.  

In the event the Code Enforcement authorities, HOA, etc. have already cured the violation and the invoice is received by the servicer, the servicer must pay the violation if the fees are less than or equal to the allowable threshold. Servicer must follow the reimbursement guidelines outlined in Section 16: Reimbursement Requests in this Property Preservation Guide. If the fees are greater than the allowable threshold, the servicer must submit an over allowable bid via HomeTracker for fines/fees/etc.

When Submitting a Bid

Include the following with the over allowable bid submission: 

•    Documentation (i.e., photos, etc.) to support violation has been cured. 
•    The date on which the servicer first received the violation(s). 
•    Legible copy of the violation(s). 
•    Invoice from the Code Enforcement authorities/HOA. 
•    Supporting documentation/information relating to fines/fees/liens negotiations including any attempts to contact the city or HOA. 

Note: Should the servicer’s failure to take appropriate action result in violation/fines/fees, the servicer must cure the violation at its expense and pay all related fees and/or fines prior to liquidation and within fifteen (15) calendar days of notification of the violation. The servicer must include the first time vacant (FTV) date when submitting a claim for expense reimbursement for a code violation.

 

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