Servicing Guide

Published September 9, 2020

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When should the property inspection be performed on a first lien mortgage loan if it is determined that the property is in disrepair?

The servicer of a first lien mortgage loan must inspect the property immediately if it has information that the value of a property may be in jeopardy because of its condition (For disaster-impacted properties, see D1-3-01, Evaluating the Impact of a Disaster Event and Assisting a Borrower). When servicer learns of any condition detrimental to the value of the property or the need for urgent repairs, the servicer must remind the borrower of his or her obligation to maintain the property and take the action depending on the borrower’s action as described in Servicing Guide D2-2-10, Requirements for Performing Property Inspections.

If the borrower... Then the servicer...
agrees to arrange for the necessary repairs and has the financial resources to do so must follow up until the repairs have been completed.
is willing to make the repairs, but is unable to do so is authorized to ask Fannie Mae to advance the necessary funds by requesting expense reimbursement if the mortgage loan is either
  • a whole mortgage loan,

  • a participation pool mortgage loan, or

  • an MBS mortgage loan serviced under the special servicing option.

    Note:Appropriate arrangements should be made for the borrower to repay the advance.

refuses to make repairs of an emergency nature or to allow the servicer to have such repairs made must continue to inspect the property until a solution to perform repairs is determined and repairs are under way.

The servicer must also adhere to the following requirements.

If the mortgage loan... Then the servicer must...
is current and/or the property is occupied determine if it should pursue other actions, such as legal action, to have emergency repairs made. For non-routine litigation matters, the servicer must notify Fannie Mae’s Legal Department by submitting a Non-Routine Litigation Form (Form 20).
is or becomes delinquent and the servicer determines the property is vacant follow the requirements for securing and repairing vacant properties and securing delinquent mortgage loans set forth in Inspecting and Protecting a Vacant or Abandoned Property and the Property Preservation Matrix and Reference Guide.

For more information please see: D2-2-10, Requirements for Performing Property Inspections.

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If you have additional questions, Fannie Mae customers can visit Ask Poli to get information from other Fannie Mae published sources.

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